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U.S. Consumer Prices Rose 3.4% Annually in August as Gas Prices Spike Driven by Iran War

The Bureau of Labor Statistics reported that U.S. consumer prices rose 0.4% in August, maintaining an annual inflation rate of 3.4% for the year. This increase was largely driven by a spike in gasoline prices, which rose 3.9% over the month and accounted for more than a third of the overall inflation. The surge in fuel costs is attributed to supply disruptions caused by the ongoing war between the United States and Iran, with benchmark crude oil prices hovering near $100 per barrel. While the annual inflation rate remained steady from July, it remains significantly higher than the Federal Reserve's 2% target. The report comes ahead of the Federal Reserve's next meeting on September 16, where markets are increasingly betting on a quarter-point interest rate hike. Fed Chair Kevin Warsh noted that the central bank's focus remains on slowing price rises. President Donald Trump stated that the Iran war will end and gas prices will fall below $2 per gallon after the midterm elections. However, experts noted that wages are failing to keep up with the cost of living, as real average hourly earnings fell by 0.3% over the past year.

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