US consumer prices rose 3.4% in the year to August, the Bureau of Labor Statistics reported on Monday, marking the fastest annual pace in over a year. Energy costs climbed as the Gulf conflict drove oil past $95 a barrel, pushing the figure above the 3.2% consensus forecast by economists surveyed by Bloomberg.

The acceleration stemmed largely from jumps in gasoline and household energy prices, alongside persistent shelter costs and tariff-related increases in goods. Core CPI, which strips out food and energy, rose 3.1% year on year, holding stubbornly above the Federal Reserve's 2% target.

The data arrived two days before the Federal Open Market Committee concludes its meeting, where Chair Jerome Powell is widely expected to deliver the Fed's first interest-rate cut of 2026. Futures traders at CME Group's FedWatch tool had priced in a quarter-point reduction, but the stronger inflation print reduced expectations for further cuts this year.

US equity futures slipped in early trading and the yield on the 10-year Treasury note rose after the release, as investors reassessed how aggressively the central bank could ease policy. The dollar strengthened against a basket of major currencies, according to Refinitiv data.

Economists at Goldman Sachs and Morgan Stanley had warned that the recent oil-price spike, triggered by disruption near the Strait of Hormuz, risked feeding through to headline inflation over the autumn. The August reading offered the first clear evidence of that pass-through reaching American consumers.