WASHINGTON – Inflation accelerated in August as a renewed conflict in the Middle East pushed gasoline prices sharply higher, creating a fresh affordability challenge just weeks before voters decide whether to preserve Republican control of Congress.
The consumer price index increased 3.4% from a year earlier, matching July’s annual rate, the Labor Department reported Friday. On a monthly basis, however, prices rose 0.4% from July, up significantly from the previous month’s 0.1% increase.
The latest figures underscore how international instability continues to affect American households. The nationwide average price of gasoline reached $4.30 per gallon Friday, more than 7% higher than a month earlier. Rising energy prices can affect transportation, shipping and air travel, potentially increasing costs across the broader economy.
President Donald Trump and Republican lawmakers are seeking to reassure voters that the administration is focused on lowering costs and strengthening the economy despite pressures beyond Washington’s direct control. The administration has pointed to the Middle East conflict, tariffs and other temporary disruptions as factors contributing to elevated prices.
Trump said Wednesday that he expected gas prices to remain under pressure until after the November midterm elections. His administration has also taken steps to limit the impact of higher borrowing costs. Treasury Secretary Scott Bessent has accelerated buybacks of Treasury bonds in an effort to keep longer-term interest rates lower, although the yield on the 10-year Treasury note reached a nearly three-year high Thursday.
The administration is also proposing a $5,000 payment to every American adult if Republicans retain a congressional majority. The plan would require approval from Congress and has drawn criticism from budget analysts who warn that such spending could add to inflationary pressures. Republicans argue that the proposal would provide direct relief to families and demonstrate a commitment to sharing the benefits of economic growth.
Excluding food and energy, core prices rose 2.4% in August compared with a year earlier, down from 2.5% in July and marking the third consecutive annual decline. That measure suggests that underlying inflation has continued to moderate even as energy costs have pushed the overall index higher.
Core prices did increase 0.3% from July to August, the largest monthly gain since April. Hotel rooms, airfares and new and used vehicles became more expensive, while apparel and grocery prices were unchanged.
Economists say the key question is whether higher energy prices represent a temporary shock or the beginning of a more lasting increase. More expensive jet fuel could lift airfares, while higher diesel prices could raise shipping costs for food and other goods.
“This is not one and done,” said Kathy Bostjancic, chief economist at Nationwide. “It’s unclear when tensions in the Middle East are going to settle down.”
The report is likely to intensify debate within the Federal Reserve over interest rates. Policymakers are divided about whether to raise the benchmark rate at their Sept. 15-16 meeting. Higher rates can slow borrowing and spending, helping contain inflation, but they can also increase the cost of mortgages, credit cards and business loans.
Financial markets put the likelihood of a rate increase at roughly 70%, according to CME FedWatch. Fed Governor Christopher Waller has indicated that cooling price increases could support holding rates steady, while Chair Kevin Warsh has suggested he may favor an increase.
The uncertainty gives Republicans an opportunity to argue that the country’s economic outlook depends not only on domestic policy but also on global developments. As midterm voters weigh household budgets, the administration is emphasizing energy security, lower borrowing costs and continued Republican control as its preferred path toward greater economic stability.
PHOTO- Shoppers pass through the bakery section at a Target store, Thursday, Aug. 13, 2026, in Woodbury, Minn. (AP Photo/Ellen Schmidt)
Brought to you by www.srnnews.com
