Inflation got worse in August as prices jumped on gas and food

Inflation Overview - Inflation rose by 2.9% in August compared to the previous year, up from 2.7% in July, marking the largest increase since January [2] - Core prices, excluding food and energy, increased by 3.1%, consistent with July's figures, both exceeding the Federal Reserve's 2% target [2] Federal Reserve Response - The new inflation data arrives before the Federal Reserve's key meeting, where a cut in the short-term rate to approximately 4.1% from 4.3% is widely anticipated [2] - The Fed faces challenges as inflation remains high while the job market shows signs of weakening, creating a complex scenario for policymakers [2] Employment Trends - Hiring has slowed significantly, with the unemployment rate rising to 4.3% in August, and weekly unemployment claims have increased sharply, indicating potential layoffs [2] - Typically, the Fed would lower rates in response to rising unemployment to stimulate spending, but high inflation complicates this approach [2] Price Changes - Monthly inflation accelerated with overall prices rising by 0.4% from July to August, compared to a 0.2% increase the previous month [2] - Specific price increases include gas prices up by 1.9%, grocery prices up by 0.6%, airfares up by 5.9%, and hotel room prices up by 2.3% from July to August [2] Tariff Impact - The impact of tariffs on imported goods has been mixed, with some prices rising modestly; clothing costs increased by 0.5% last month, while furniture costs rose by 0.3% [2]