U.S. inflation accelerated last month as gas prices spiked following renewed fighting in the Middle East, highlighting the affordability challenges that are top of mind for many voters with the midterm elections now just seven weeks away.

The consumer price index climbed 3.4% last month relative to a year earlier, the Labor Department reported Friday, matching July's figure.

Yet inflation accelerated on a month-to-month basis, with costs surging 0.4% from July — quadruple the 0.1% recorded the previous month.

Inflation remains obstinately elevated more than five years after prices surged as the economy emerged from the pandemic.

Friday’s report intensifies pressure on the inflation-fighters at the Federal Reserve to raise their benchmark interest rate next week, which could drive up mortgage and auto loan costs in the months ahead.

Federal Reserve Chair Kevin Warsh and other Fed officials have signaled that they would need to see continued disinflation to keep rates where they are.

“Today’s August report did not deliver that,” said Kathy Bostjancic, chief economist at Nationwide.

Gasoline prices are hardly the only ones on the rise.

The cost of appliances, car repairs, and wireless phone services likewise surged last month.

Nevertheless, economists are concerned that pricier fuel may seep into other sectors of the economy.

Diesel prices have reached record highs exceeding $6 a gallon, driving up the expense of shipping groceries and other goods.

According to the latest data, airline tickets have risen 2.7% month over month and have soared by more than 23% compared with a year earlier.

With the volatile food and energy categories excluded, core prices were 2.4% higher in August than a year earlier, a slight decline from July's 2.5% and the third consecutive drop.

On a monthly basis, however, core prices rose 0.3% from July to August, the largest increase since April.

The unexpected month-over-month increases in core prices are likely to embolden those Fed officials who have pushed for higher interest rates.

According to CME Fedwatch, Wall Street investors now see a more than 80% chance that the Fed will raise rates on Sept. 16 — a 10-point jump from Thursday.

The Trump administration is striving to allay voters' anxieties regarding elevated prices and mounting interest rates.

On Wednesday, President Donald Trump pledged $5,000 payments to every American adult should the GOP retain a congressional majority.

Such a measure would necessitate congressional approval and could potentially fuel inflation.

Treasury Secretary Scott Bessent has intensified buybacks of Treasury bonds in a bid to keep longer-term interest rates subdued.

The yield on the 10-year Treasury reached a nearly three-year high on Thursday and was trading at a still-elevated 4.9% on Friday.

Chris Mitchell, 36, a customer service agent for an auto parts retailer, says he is still struggling to keep up with rent, food, and other costs, much more so than before the pandemic.

Prior to the onset of COVID-19, Mitchell recalls dining out two to three times weekly and regularly attending the theater—pursuits he has since curtailed dramatically.

He and his girlfriend own three cars that are approximately 20 years old.

The rent for the residence he shares with her and her 12-year-old son surged by $200 this year, reaching $2,300.

He had relocated there so as to more readily discharge his bills.

“I’ve been suffering, I need a raise, and I’m actually on the verge of requesting one from my boss in the coming week,” he said.

He had received a raise two years ago, “but it simply doesn’t stretch as far any longer.”

According to Friday’s report, gas prices surged 3.9% between July and August alone, leaving them more than 27% higher than they had been a year earlier.

As prices at the pump have continued to climb, inflation is likely to worsen over the course of this month.

The nationwide average cost of a gallon of gas on Friday stood at $4.30, 7% above where it was a month ago.

Beyond the escalating cost of airfare, hotel room rates surged 2.4% between July and August alone, rendering them 3.2% more expensive than they were a year prior.

Meanwhile, car repair expenses increased by 1.1% in the past month and have risen 5.2% relative to the previous year.

The rising cost of services such as hotel rooms and wireless plans will also unsettle many Fed officials, since these costs are not driven by higher energy prices.

“Analysts and the Fed had been counting on these categories of prices to moderate by now,” Scott Anderson, chief U.S. economist at BMO Capital Markets, wrote in a note.

“The trends coming from the August CPI report do not build confidence that inflation is continuing on its path of moderation toward the 2% target.”

On Thursday, a wholesale price report revealed a surge in chemical prices, probably attributable to the increased cost of oil.

Apparel and grocery prices remained unchanged between July and August, offering consumers a measure of relief, although egg prices rose 2.9% last month.

Egg prices are nevertheless still considerably lower than they were a year ago.

For a long time, many economists and Federal Reserve officials have regarded higher gas prices as just one of several “one-time” shocks pushing inflation up, alongside tariffs and a surge in investment in AI data centers.

For months, the hope has been that, as the war against Iran wound down and the effects of tariffs faded, inflation would gradually ease.

Yet there are few signs of the Iran war cooling, and even Trump has said gas prices won’t retreat until after the midterm elections in November.

And while Trump’s trade fight with Canada will impact a small number of imports, it is a reminder that tariffs remain a threat that could push up other costs.

“This is not a one-off,” Bostjancic said.

“It remains uncertain when tensions in the Middle East will subside....

This appears as though it could be a protracted disruption.”

Friday’s report has led many economists to pencil in a rate hike at the Fed’s next meeting on Sept. 15-16.

In a high-profile speech two weeks ago, Chair Warsh suggested that he was leaning toward a rate hike, but he did not commit to doing so at a specific time.

Warsh has said he doesn’t want to tip his hand about his next moves, leaving some uncertainty going into the meeting.

The Fed left its key rate unchanged at its last policy meeting in late July, though three officials voted in favor of a quarter-point hike, which would have raised it to approximately 3.9% from 3.6%.