Consumer prices in the United States increased by 2.9% in August compared to the previous year, reflecting a modest acceleration in inflation linked to President Donald Trump's tariff policies.
This figure aligns with economists' forecasts and represents an uptick from the 2.7% rate observed in July, as reported by the U.S. Bureau of Labor Statistics.
Although the rise falls short of the 3% level seen in January when Trump assumed office, it underscores ongoing pressures from trade measures.
The latest data emerges just ahead of the Federal Reserve's anticipated announcement of a quarter-point interest rate reduction, potentially complicating policymakers' deliberations.
A cut in borrowing costs could stimulate spending and exert further upward pressure on prices, even as inflation remains below earlier peaks.
Key contributors to the monthly price surge included housing costs, which rose 0.4% and formed the bulk of the overall increase.
Food prices advanced 0.5%, while energy costs increased by 0.7%, according to the BLS figures.
From July to August, prices overall climbed 0.4%, the most significant monthly gain since December.
Egg prices held steady in August but remain nearly 11% higher than a year earlier, while coffee prices have jumped 20% over the same period.
Core consumer price index, excluding volatile food and energy, remained steady at 3.1%.
Analysts have noted that tariffs have played a modest role in recent inflationary trends, though much of the increase stems from housing and food sectors with limited ties to trade levies.
The economy faces uncertainty, with inflation gaining ground while job growth decelerates, evoking concerns of stagflation.
A recent jobs report highlighted a marked slowdown in August hiring, prolonging a subdued phase for the labor market.
Further revisions to prior estimates revealed fewer jobs added in 2024 and early 2025 than initially thought, heightening worries about employment health.
While widespread layoffs have been avoided, the softening job data has sparked recession fears among some experts.
Federal Reserve officials grapple with conflicting signals: elevating rates to curb tariff-driven inflation risks economic contraction, whereas lowering them to bolster hiring could exacerbate price pressures.
Market sentiment, as gauged by the CME FedWatch Tool, indicates a 90% probability of a quarter-point cut this month and 9% for a half-point reduction.
Current rates range from 4.25% to 5.5%, unchanged for over a year amid economic volatility from immigration and trade policies.
The Fed aims to achieve a 2% inflation target, unseen since early 2021, balancing higher rates' cooling effect against their potential to hinder growth.
Fed Chair Jerome Powell, in a recent Jackson Hole address, highlighted rising downside risks to employment.
Initial jobs data for May and June were revised downward by 258,000 positions, with June figures turning negative for the first time since December 2020.
The unemployment rate edged up to 4.3%, the highest since 2021.
Uncertainty from tariffs may have delayed survey responses, contributing to data discrepancies, economists suggest.
The White House attributed gaps to the Bureau of Labor Statistics, but experts link them to policy-induced disruptions.
This inflation report follows the dismissal of BLS Commissioner Erika McEntarfer by Trump last month, after a subdued jobs release.
Trump alleged, without substantiation, that McEntarfer manipulated data for political gain.
A Biden appointee confirmed by the Senate in 2024, McEntarfer had 20 years of federal service.
"It has been the honor of my life to serve as Commissioner of BLS alongside the many dedicated civil servants tasked with measuring a vast and dynamic economy," McEntarfer stated in a social media post post-dismissal. "It is vital and important work and I thank them for their service to this nation."
Former BLS Commissioner William Beach, appointed by Trump, criticized the action.
"The totally groundless firing of Dr. Erika McEntarfer, my successor as Commissioner of Labor Statistics at BLS, sets a dangerous precedent and undermines the statistical mission of the Bureau," Beach posted on X.
The Fed's interest rate decision is slated for September 17.