US consumer inflation rose to 2.9% in August, its highest since January, as prices of gas, groceries and airfares jumped, according to the Labor Department. The figures come just ahead of next week’s Federal Reserve meeting, where policymakers are expected to cut interest rates despite persistent price pressures.The consumer price index (CPI) was up from 2.7% in July, while core inflation, excluding volatile food and energy costs, held steady at 3.1%. Both readings remain above the Fed’s 2% target. On a monthly basis, inflation quickened to 0.4% in August from 0.2% in July, with gas prices up 1.9%, grocery costs up 0.6% and airfares surging 5.9%, AP reported.The inflation print is the last major data point before the Fed’s two-day meeting beginning Tuesday, where officials are widely expected to lower the benchmark rate from 4.3% to about 4.1%. But the central bank is in a difficult position, balancing stubborn inflation with clear signs of labour market weakness.The unemployment rate ticked up to 4.3% in August, while jobless claims rose sharply by 27,000 to 263,000 — the highest in nearly four years. “Consumer inflation came in mildly hotter than forecast, but not nearly high enough to prevent the Fed from starting to cut rates next week,” Kathy Bostjancic, chief economist for Nationwide, told AP. “The labour market is losing steam and reinforces that the Fed needs to start cutting rates next week and that it will be the start of a series of rate reductions.”Economists said rising layoffs and slowing hiring reinforce the case for monetary easing. Yet inflationary pressures — partly driven by President Donald Trump’s sweeping tariffs on imports — could restrain the Fed from cutting rates aggressively.Prices of clothing, furniture, appliances and rentals all rose in August, while hotel room tariffs were up 2.3%. Food costs continued to climb, with tomatoes, apples and beef leading the gains.The latest inflation data has also added to political tensions. Trump, who has pushed for deeper cuts, recently attempted to fire Fed governor Lisa Cook, though a court blocked the move and allowed her to retain her position while the case proceeds.Businesses large and small are grappling with higher costs. Raleigh-based restaurant owner Cheetie Kumar said her input prices are up 10% from last year, with coffee costs tripling and spices doubling. “Those are things I cannot source locally … I don’t know any nutmeg growers in North Carolina,” she said.Cosmetics maker E.L.F. said it raised prices by $1 earlier this year, but CFO Mandy Fields admitted last month it is unclear if that will be enough to offset tariff costs. Retailers such as Home Depot and Macy’s have described their price hikes as modest, though Walmart has warned of further increases as inventories are replenished.
