America’s inflation problem is proving stubborn, with the latest figures increasing pressure on the Federal Reserve to raise interest rates again.
U.S. consumer prices rose 3.4% in August 2026 from a year earlier, unchanged from July, according to the latest U.S. Consumer Price Index figures.
Increase
Prices increased 0.4% during August 2026, a sharp acceleration from July’s 0.1% rise. Core inflation, which excludes volatile food and energy prices, rose 2.4% year-on-year and 0.3% during the month.
Higher petrol prices were a major contributor, with energy costs rebounding amid renewed geopolitical tensions.
Pressure
However, the persistence of underlying price pressures remains a concern for policymakers, particularly because U.S. inflation is still well above the Fed’s 2% target.
Attention now turns to the Federal Reserve’s September 15th–16th 2026 meeting. Financial markets have reacted strongly to the latest figures, with interest-rate futures putting the probability of a quarter-point rate increase at around 87% on September 16th 2026.
Decision
The Fed therefore faces a difficult decision. Higher rates could help contain inflation but would also increase borrowing costs for households and businesses.
For now, the latest data suggest that the battle against inflation is far from over, making a September rate increase increasingly likely.