Inflation climbed in August as Trump's tariffs intensified

(NEW YORK) -- Consumer prices rose 2.9% in August compared to a year ago, marking an uptick in price increases as President Donald Trump's tariff policy intensified. The reading matched economists' expectations.

The fresh inflation data indicated an acceleration from a 2.7% inflation rate recorded in the month prior, according to the U.S. Bureau of Labor Statistics. Price increases remain below the 3% rate recorded in January, the month Trump took office.

The new report arrives days before the Federal Reserve is set to announce a widely expected quarter-point interest rate cut. The price hike last month may give policymakers pause as they weigh an interest rate cut, since a reduction of borrowing costs could boost spending and put upward pressure on prices.

Egg prices, a longtime symbol of rising costs, were flat in the month of August. Still, the price of eggs stands nearly 11% higher than where it was a year ago. The price of coffee has surged 20% over the past year, the data showed.

Housing costs jumped 0.4% in August, which accounted for the largest share of the overall hike in prices, the BLS said. Food prices rose 0.5% last month, while energy costs climbed 0.7%, the data showed.

In all, prices climbed 0.4% from July to August, which marked the largest monthly increase since December.

In recent months, tariffs modestly contributed to the uptick in overall inflation, analysts previously told ABC News, but overall price increases owed largely to a rise in housing and food products with little connection to Trump's levies.

The inflation report arrived at a wobbly moment for the nation's economy. In recent months, inflation has picked up while hiring has slowed, posing a risk of an economic double-whammy known as "stagflation."

A jobs report last week showed a sharp decrease in hiring in August, extending a lackluster period for the labor market. Meanwhile, a revision of previous hiring estimates on Tuesday revealed the U.S. economy added far fewer jobs in 2024 and early 2025 than previously estimated, deepening concern about the health of the U.S. job market.

The weak jobs data has raised alarm among some analysts that the U.S. economy may be slipping toward a recession, though the economy has largely averted the type of widespread job losses that often accompany a downturn.

The economic conditions have put Fed policymakers in a bind. If the Fed raises interest rates as a means of protecting against tariff-induced inflation, it risks tipping the economy into a downturn. On the other hand, if the Fed lowers rates to stimulate the economy in the face of a hiring slowdown, it threatens to boost spending and worsen inflation.

In response to the flagging labor market, the Fed is expected to cut interest rates when policymakers meet next week. Investors peg the chances of a quarter-point rate cut this month at about 90% and the odds of a half-point cut at roughly 9%, according to CME FedWatch Tool, a measure of market sentiment.

The inflation data on Thursday marks the latest figures unveiled by the BLS since Trump fired BLS Commissioner Erika McEntarfer last month in response to a weak monthly jobs report. Trump claimed without evidence that McEntarfer had manipulated statistics for political reasons.

McEntarfer, a Biden appointee who was confirmed by the Senate in 2024, had served in the federal government for two decades.

"It has been the honor of my life to serve as Commissioner of BLS alongside the many dedicated civil servants tasked with measuring a vast and dynamic economy," McEntarfer said in a social media post after her dismissal. "It is vital and important work and I thank them for their service to this nation."

William Beach, a former commissioner of the Bureau of Labor Statistics, who was appointed by Trump, condemned McEntarfer's dismissal.

"The totally groundless firing of Dr. Erika McEntarfer, my successor as Commissioner of Labor Statistics at BLS, sets a dangerous precedent and undermines the statistical mission of the Bureau," Beach posted on X.

McEntarfer did not respond to an earlier ABC News request for comment.