U.S. inflation worsened last month, putting Fed in difficult spot as job market slows

U.S. inflation worsened last month, putting Fed in difficult spot as job market slows Economy Sep 11, 2025 12:37 PM EDT

WASHINGTON (AP) — Inflation rose last month as the price of gas, groceries, and airfares jumped, while a measure of layoffs also increased, putting the Federal Reserve in a tough spot as it prepares to cut rates at its meeting next week despite persistent price pressures.

Consumer prices increased 2.9% in August from a year earlier, the Labor Department said Tuesday, up from 2.7% the previous month and the biggest increase since January. Excluding the volatile food and energy categories, core prices rose 3.1%, the same as in July. Both figures are above the Federal Reserve’s 2% target.

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