Prices rose in August. Is it time to raise interest rates?

U.S. consumer prices rose 0.4% from the month before in August, the Labor Department estimated Sept. 11, in line with forecasters' expectations.

A spike in gas prices drove the increase, rising 3.9% over the month as the Iran war further limited the global oil supply. Over the year, prices for all items rose 3.4%, matching July's pace. That was still enough to surpass workers' paychecks, which rose on average 3.1% over the same period.

After reaching a peak of 9.1% in 2022, year-over-year inflation had made its way back to 2.4% at the start of 2026. It jumped to 3.4% in March driven by rising oil and gas prices following the start of the war. After hitting 4.2% in May, it slowed to 3.5% in June and to 3.4% in July.

It, along with the Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures price index, remain above the central bank's 2% annual target.

The Fed typically raises its benchmark for interest rates across the country to help tame inflation and lowers it to stimulate the job market. After Fed Chair Kevin Warsh said Aug. 28 policymakers’ focus should be on rising prices and U.S. employers added a surprising…

Original source: https://www.usatoday.com/money/