Consumer prices rose 2.9% in August compared to a year earlier, the U.S. Bureau of Labor Statistics reported. The increase, up from 2.7% in July, comes as President Donald Trump’s tariffs intensify.
Housing and Food Drive Costs
Housing costs rose 0.4% in August, making up the largest share of the overall increase. Food prices climbed 0.5% and energy costs 0.7%. Egg prices held steady for the month but remain 11% higher than a year ago, while coffee surged 20% year-over-year. Overall, prices grew 0.4% from July, the largest monthly gain since December.
Fed Faces Tough Choices
The report arrives days before the Federal Reserve is expected to cut interest rates. While a rate cut could ease pressure on the slowing job market, it risks fueling further inflation. Chair Jerome Powell has warned that tariffs are adding to price pressures, putting policymakers in a bind between fighting inflation and avoiding recession.
Jobs Market Weakens
Hiring slowed significantly in August, according to a recent jobs report. Revisions also showed fewer jobs were added in 2024 and early 2025 than previously reported. Analysts warn the combination of rising inflation and weak hiring could push the economy toward stagflation.
Political Fallout
The inflation data also follows Trump’s dismissal of BLS Commissioner Erika McEntarfer, who he accused of manipulating jobs data. McEntarfer, a Biden appointee with two decades of federal service, called her role “the honor of my life.” Former BLS Commissioner William Beach condemned the firing as “totally groundless” and a threat to the bureau’s independence.
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