AFP, Washington

US consumer inflation rose last month to its highest level since January, government data showed Thursday, although analysts believe that this will not deter the central bank from an interest rate cut next week.

The data also underscored cost-of-living pressures on households as President Donald Trump’s tariffs filter through the world’s biggest economy, complicating the Federal Reserve’s role in maintaining stable prices.

The consumer price index (CPI) picked up to 2.9 percent in August, accelerating from 2.7 percent on a year-on-year basis in July, said the Labor Department.

The figure was in line with analysts’ expectations, as economists try to gauge if Trump’s duties will trigger a one-off price increase or lead to persistently higher costs.

On a month-on-month basis, CPI rose 0.4 percent in August, the report said, also picking up from 0.2 percent in July.

A measure of underlying inflation, stripping away the volatile food and energy components, was up by 3.1 percent from a year ago.

“We are seeing some impact from tariffs, especially with higher prices on cars and clothes,” said LPL Financial chief economist Jeffrey Roach.

He added that grocery costs also clocked their biggest jump since 2022, adding to consumers’ stress.

Since returning to the presidency in January, Trump has imposed a 10-percent tariff on almost all trading partners and higher rates hitting dozens of economies.

He has separately targeted sector-specific imports such as steel and autos, and economists warn that the cumulative effect will take time to reach consumers.

All eyes are on inflation numbers given their potential bearing on the Fed’s interest rate decisions.

But the central bank is poised to start cutting rates at its next policy meeting from September 16-17 even with slightly hotter inflation, Nationwide chief economist Kathy Bostjancic told AFP.

“The jump in initial jobless claims to its highest reading since October 2021 overshadows the importance of the inflation report,” she said, referring to a separate set of data released Thursday.

The uptick signals that the labor market is losing steam “and reinforces that the Fed needs to start cutting rates next week.”

International Monetary Fund spokesperson Julie Kozack told reporters Thursday that “some strains are beginning to show” in the US economy, with demand cooling and job growth slowing.

“There is scope for the Fed to begin to lower policy rates,” she added at a press briefing, noting risks to the employment market.

A rate reduction, which would be the first since December, will likely also be the start of a series of cuts, Bostjancic said.

Traders widely anticipate that the Fed will lower the benchmark lending rate by 25 basis points at the end of its September meeting.