U.S. inflation accelerates to 3.7% in August amid jump in gas prices

Investing.com -- U.S. consumer prices accelerated by more than expected on a yearly basis in August, as a sharp uptick in gas prices contributed to lingering inflationary pressures in the world's largest economy that may impact the Federal Reserve's interest rate path for the rest of the year.

The Labor Department's closely-watched consumer price index (CPI), a measure of price gains, increased by 3.7% annually during the month, up from 3.2% in July and faster than economists' estimates of 3.6%. Month-on-month, the CPI reading was 0.6%, picking up the pace from 0.2% and in line with projections.

Gasoline prices were the largest contributor to the quickening monthly rise, accounting for more than half of the jump, according to the Labor Department. The index for gas costs surged by 10.6% in August after climbing by just 0.2% in the prior month. Growth in overall energy prices, which also includes fuel oil, electricity and utility gas service, spiked to 5.6% from 0.1%.

Removing volatile items like fuel and fuel, monthly inflation edged up to 0.3%, surprising expectations that the number would hold steady at 0.2%. Annually, so-called "core" CPI slowed from 4.7% to 4.3% as anticipated.

Corraling elevated inflation has been a major objective of the Fed's nearly year-and-a-half long campaign of interest rate hikes. Policymakers are widely tipped to skip further tightening at their upcoming meeting this month, but uncertainty still remains over what they may choose to do later on in 2023.

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