The report showed inflation rose 3.4% in August compared to a year earlier. The month-to-month rise of 0.4% is higher than the 0.1% seen in the July 2026 report.
Inflation is currently 1.4% higher than the U.S. Federal Reserve's target rate of 2%.
Energy prices and housing prices were major driving factors that led to inflation in the month of August. Gas prices jumped nearly 4% in August from July, according to the U.S. Bureau of Labor Statistics.
Housing prices rose slightly in the month of August but were around 3% higher than in August 2025.
The August inflation report comes shortly before the U.S. Federal Reserve is set to meet in September to decide what to do with inflation rates.
"I think at this point it's a coin flip. I would lean a little bit more towards them increasing them by a quarter of a percent as opposed to leaving them unchanged. I think with the stronger-than-normal jobs report and high inflation, I think that will tilt the Fed towards increasing rates at this point," University of San Diego Economics Professor Alan Gin, Ph.D., said.
Gin said if that happens, borrowing costs would eventually rise, meaning consumers will likely spend more money on paying for credit cards, new mortgages, and auto loans.