US consumer prices rose 3.4% in the year to August, unchanged from July, with higher petrol costs pushing up the cost of living, according to figures from the Bureau of Labor Statistics.

The reading comes ahead of the Federal Reserve’s interest rate decision next week, with growing expectations that rates will be increased to slow the pace of price rises — an unusual direction of travel after the easing cycle, and one driven by an external supply shock rather than domestic demand. The Daily Mirror carried the report as BBC copy.

Fuel is doing most of the work

Gasoline prices rose 3.9% in August alone, accounting for more than a third of overall inflation.

The average price of a gallon of diesel hit a new all-time high of more than $6 on Friday. That is a threshold crossing rather than a marginal move: diesel stood at $5.98 a day earlier, and petrol at $4.27, as Brent crude topped $108 — its highest since May — after President Trump said he was not seeking a deal with Iran.

Brent is now hovering above $100 a barrel following recent escalations in the US–Iran war, which has disrupted supply.

Why diesel matters more than the pump price

Higher oil prices raise costs at the pumps directly, but diesel is the freight fuel. Dearer diesel makes moving goods more expensive, and those costs are passed to consumers through steeper prices for food and other staples — which feeds back into the headline inflation rate with a lag.

Wages are not keeping pace. Separate figures showed real average hourly earnings fell 0.3% over the past year.

The Sri Lankan read

No Sri Lankan outlet has yet published a revised domestic inflation projection, and neither this report nor earlier coverage addresses what $100-plus crude does to the Ceylon Petroleum Corporation’s import bill or to domestic fuel pricing — the central unanswered question for Sri Lanka in this thread.

Not reported

The report does not give the month-on-month change in consumer prices, the core inflation rate stripping out food and energy, or how far the August figure sat from forecasts. It does not say by how much the Fed is expected to move, or give the market-implied probability.

It does not state the national average diesel price beyond “more than $6”, say how much it has risen over the year, or indicate how long analysts expect the disruption to last.