After a year of easing inflation, the U.S. experienced its highest inflation rate increase in over a year last month, as the prices of goods and services continue to rise at high levels. 

According to consumer price index data released Wednesday by the Bureau of Labor Statistics, the price of goods and services increased by 3.7% in the 12-month period ending in August. Increases in the cost of shelter and food largely drove the increase. 

The prices of goods and services increased 0.6% in August alone, the Bureau of Labor Statistics said. August marked the highest one-month increase to the consumer price index since June 2022.

Shelter costs rose 7.3% in the last year, while food increased 4.3%. The data noted, however, that the price of food purchased at grocery stores increased a mere 3% while food away from home increased 6.5%. 

Energy costs remain slightly cheaper than a year ago, as gasoline was about 3.3% cheaper than in August 2022. Natural gas was about 16.5% lower in August 2023 than August 2022. 

The consumer price index weighs the costs of goods based on their importance. Items like food, shelter and energy tend to be weighted more heavily.

SEE MORE: US employment increased in August, but so did the unemployment rate

The CPI had gradually fallen since June 2022, when it peaked at 9.1%, its highest rate in nearly four decades. The CPI dropped to a low of 3% in June. 

The new data strongly indicates that the Federal Reserve is poised to raise interest rates again. The base interest rate currently stands at a 22-year high of 5.25%-5.5%. 

Federal Reserve Chair Jerome Powell has said the Federal Reserve’s goal is to get the annualized inflation rate to 2%. The next time the Federal Reserve meets is Sept. 19-20, when interest rates could go up again. 

Powell has said pay increases would need to subside for inflation to decline. Average weekly earnings increased 3.9% from August 2022 through August 2023, according to government data.

SEE MORE: Continued wage increases could lead to more interest rate hikes

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