Rising gas prices push up the rate of annual inflation to 3.7% – the second consecutive

Inflation in the US has accelerated for a second consecutive month to a 3.7 percent annual rate – up from 3.2 percent in August. 

Prices rose 0.6 percent month-on-month to August, driven mainly by a jump in gas prices – which accounted for over half of the increase.

Shelter costs also contributed to the rise, which went up for the 40th consecutive month. 

The consumer price index report comes a week before the Federal Reserve‘s two-day policy meeting. 

But despite the acceleration in inflation, the Central Bank is expected to hold interest rates steady while deciding whether a further rate hike later in the year will be needed to combat inflation.

Inflation in the US has accelerated for a second consecutive month to a 3.7 percent annual rate – up from 3.2 percent in August

Core inflation, which strips out volatile prices including food and energy and is deemed a better gauge of long-term trends, stayed mostly mild. 

Monthly core inflation rose by 0.3 percent in August – up marginally from a 0.2 percent increase in July. 

For the 12 month ending in August, core inflation slowed to 4.3 percent – down from 4.7 percent last month. 

Americans faced surprise pain at the pump last month as gas prices surged – putting upward pressure on overall inflation. 

The average price of a gallon of regular gasoline was $3.84 in August compared with $3.60 in July, according to OPIS, an energy-data and analytics provider cited by The Wall Street Journal. 

The national average for a gallon of gasoline stood at $3.811 as of September 5, data from the American Automobile Association showed. 

The price has not been higher at this time of year since September 2012 when filling up at the pump hit $3.84 per gallon amid concerns about supply disruptions from the Middle East.

Americans faced surprise pain at the pump last month as gas prices surged – putting upward pressure on overall inflation 

The seasonal high this year is significant because it strikes at at a time when gas prices generally decline as summer gives way to fall and people drive less. 

Oil production cuts by Saudi Arabia and Russia have caused prices to increase – on top of an already tightened global supply.

In July, major producer Russia – which sent markets into a frenzy when it invaded neighboring Ukraine nearly two years ago – vowed to take 500,000 barrels a day off its exports.

At a time where US officials are still trying to make up for the more than 1million barrels a day of fuel-making lost during the pandemic, the loss is a significant one, and looks to be finally being felt.

Another factor contributing to the higher prices is a lack of refining capacity on the US side, after hiccups over the summer limited output from US gasoline producers.

Record heat in fuel-making hubs such as Texas and Louisiana further affected supplies, after several refiners promised they would run their plants at up to 95 percent of their capacity in a bid to pump out more fuels despite the heat. 

This is a breaking news story. More to follow.