US inflation hits 3.4% as diesel reaches record $6 gallon amid US-Iran tensions
Annual inflation in the United States held steady at 3.4%, with core inflation easing to 2.4%. Monthly price increases accelerated sharply, driven by supply disruptions caused by the conflict between the US and Iran.
The US Bureau of Labor Statistics reported that annual inflation rates remained unchanged from July through August at 3.4%. Core inflation, excluding food and energy costs, declined to 2.4% from 2.5%. Despite the flat annual rate, monthly prices rose 0.4% in August, marking the fastest pace of increase in three months. Diesel fuel hit a new average high of more than $6 per gallon on Friday.
This price surge stems from higher wholesale oil costs linked to supply disruptions resulting from the ongoing war between the US and Iran. The data arrives just before the Federal Reserve meets next week. Before the release, CME's FedWatch tool estimated a 67.4% chance of a quarter-point interest rate hike. Odds jumped to 91.6% following the report.
Previous comments by former Fed Chairman Warsh influenced market expectations. He stated that broad financial conditions were not restrictive and emphasized the need for underlying inflation to move toward policy objectives at sufficient speed.
