Consumer prices rose 3.4% in August while average hourly earnings increased just 3.1%, marking a renewed squeeze on purchasing power as inflation outpaces wage growth. Energy costs, particularly gasoline prices, are the primary driver of inflation, and economists warn the gap may persist for years as geopolitical pressures continue.
U.S. wholesale prices rose 0.4% in August as measured by the producer price index, matching expectations but keeping annual inflation at 5.4%, well above the Federal Reserve's 2% target. Energy and goods prices drove most of the increase, with the report influencing market expectations for the Fed's upcoming interest rate decision.