US inflation holds steady at 3.4% ahead of Federal Reserve meeting

Consumer prices in the US rose 3.4% year-over-year in August, matching July’s reading exactly and landing right on economists’ forecasts. The Bureau of Labor Statistics released the data on September 11, just days before the Federal Reserve’s next policy decision, giving policymakers one last inflation snapshot before they decide whether to hike rates again. Gasoline did the heavy lifting On a monthly basis, the CPI climbed 0.4% in August, the steepest single-month jump in three months. Gasoline prices surging 3.9% accounted for more than a third of that increase on their own. Broader energy costs rose 2.1% for the month. Core CPI rose 0.3% month-over-month but its annual pace actually ticked down to 2.4% from 2.5% in July. Producer prices add another layer of pressure The day before the CPI release, the producer price index offered its own preview of inflationary momentum. Wholesale prices rose 0.4% month-over-month in August and were up 5.4% compared to a year earlier. The combination of sticky consumer inflation and elevated producer prices creates an uncomfortable backdrop for the Fed’s September 15-16 meeting. The central bank has held its policy rate in the 3.50% to 3.75% ran...