WASHINGTON >> U.S. consumer prices increased by the most in seven months in August amid higher costs for housing and food, but a surge in first-time applications for jobless benefits last week kept the Federal Reserve on track to cut interest rates Wednesday.

The larger-than-expected rise in the Consumer Price Index reported by the Labor Department today resulted in the biggest year-on-year increase in inflation since January. Higher inflation and softening labor market conditions fanned fears of stagflation, and pose a dilemma for the U.S. central bank, beyond Wednesday’s anticipated rate decision.

The broad increase in inflation partly reflected businesses passing on higher costs from President Donald Trump’s sweeping tariffs to consumers and a rebound in demand for travel. Tourist tra

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