Inflation remained stubbornly high in August, largely on the back of higher energy prices amid the Iran war, economists said.
Inflation remained stubbornly high in August - and economists said consumers are likely to continue to feel the financial pain in coming months as tensions flare in the Middle East, driving up gasoline and other energy costs.
The consumer price index, a measure of inflation, rose 3.4% on an annual basis in August, unchanged from July , according to data issued Friday by the Bureau of Labor Statistics .
"You've got a lot of shocks that are pushing up inflation and making it uncomfortably high," said Mark Zandi, chief economist at Moody's.
The Iran war, tariffs and artificial intelligence are among the factors putting upward pressure on consumer prices, economists said.
"The shocks, we keep hoping they fade away into the background," Zandi said. "But they're not going away. They're still plaguing us with these big increases."
The CPI report comes as yields on U.S. Treasury bonds have jumped to their highest levels in years , raising borrowing costs for consumers seeking certain types of debt like mortgages and auto loans.
Some economists said Friday's relatively hot inflation reading makes it likely the Federal Reserve will raise interest rates at its policy meeting next week in order to cool the economy and help bring the U.S. inflation rate down to its 2% annual target. Inflation has been above that target for more than five years.
The trajectory of interest rates is still somewhat uncertain, though, economists said.
"There's a lot riding on this CPI report as far as the Fed is concerned," said Thomas Ryan, a North America economist at Capital Economics.
Inflation risks seem "definitely skewed" to the upside, Ryan said.
"We're not really convinced we're heading back to 2%, at least over the next six months or anytime soon," Ryan said.
The Iran war has a lot to do with the current high inflation, economists said.
The war has severely restricted the flow of oil through a key Middle East corridor for energy trade, reducing global energy supplies and raising prices, economists said.
"The conflict is a major energy shock to the global economy," said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank.
"If the conflict never happened this year, I don't even really think we'd be talking about inflation with much interest," he said.
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