US inflation steady at 3.4% in August — higher fuel costs strain households

The US Bureau of Labor Statistics reported consumer prices rose 3.4% year-on-year in August, unchanged from July.

Gasoline prices alone increased 3.9% in August, which the BLS said accounted for more than a third of the overall inflation for the month. Higher oil-derived transport costs can feed into consumer prices for food and other goods.

Average retail diesel reached a new record above $6 per gallon on Friday. The rise in fuel prices has been linked to supply disruptions amid the US–Iran conflict; Brent crude has been trading above $100 a barrel following recent escalations.

Real average hourly earnings fell 0.3% over the past year, the data show, adding strain to household budgets as prices rise.

Market expectations for a Federal Reserve rate increase have strengthened: 85% of traders tracked by CME Group are pricing a 25 basis point hike at the Fed’s next meeting. Skyler Weinand, chief investment officer at Regan Capital, said inflation remains “still too hot” and that a rate hike is effectively assured. Jamie Hagen, president of Hell Bent Xpress, told the BBC higher oil prices have already reduced freight demand for his trucking business.