Inflation and Energy Costs Increase
Economic data showed that inflation and energy costs continued pressuring American households and businesses. Consumer prices rose 3.4% in August from a year earlier, matching July’s annual rate.
Monthly inflation accelerated to 0.4% from 0.1% as gasoline prices increased after renewed fighting in the Middle East. Persistent price growth remained a challenge for the Federal Reserve.
Diesel reached a record national average of $6.05 per gallon, compared with $5.85 one week earlier and $3.70 a year ago. Higher fuel costs affected freight and delivery networks.
Some companies passed those expenses to customers through added fees on online purchases and mailed packages. The increase therefore threatened to raise prices across many everyday goods.
Wholesale inflation also strengthened, with producer prices rising 5.4% from the previous year and 0.4% from July. Both readings exceeded their July increases.
Housing Affordability Weakens
Sales of previously occupied homes fell 2% in August to an annual pace of 3.98 million units. This marked the third consecutive monthly decline and the slowest pace in over a year.
Compared with August 2025, sales declined 1.2%. Buyers faced both expensive homes and rising mortgage rates, which continued limiting their purchasing power.
The average 30-year fixed mortgage rate increased to 6.76% from 6.71%, reaching its highest level in more than 14 months. A year earlier, it averaged 6.35%.
Borrowing costs for 15-year fixed mortgages climbed to 6.09% from 6.04%. Higher monthly payments encouraged some prospective buyers to delay purchases and kept housing activity stagnant.
Employment Remains Stable as Markets Recover
Labor-market data remained comparatively strong despite inflation and housing weakness. New unemployment claims declined to 206,000 from a revised 207,000, while layoffs stayed historically low.
The four-week average also eased to 206,000. During the past year, weekly applications generally remained between 200,000 and 230,000.
Stocks rebounded Friday as oil prices retreated and the inflation report came close to expectations. The S&P 500, Dow Jones Industrial Average, and Nasdaq all rose.
Brent crude fell 3% to $104.42 after approaching $110 overnight. Even with that relief, high energy prices and tariffs continued threatening consumer budgets before the midterm elections.
References
Chapman, M. (2026, September 12). America In Focus: Inflation accelerated in August, home sales weaken and diesel prices soar. AP News. https://apnews.com/article/iran-trump-economy-inflation-unemployment-diesel-720096ea610880ddec66561c29cdc283