Rising gasoline prices pushed the annual U.S. inflation rate to 3.4% in August, according to the latest Consumer Price Index released Friday by the U.S. Bureau of Labor Statistics.
The pace of rising inflation also accelerated, jumping 0.4% for the month of August following a 0.1% increase for the month of July. The gasoline index alone increased 3.9% in August, accounting for more than one-third of the energy index’s 2.1% monthly increase.
The average price of a gallon of gasoline in the U.S. is now $4.295 a gallon, according to AAA, and is up more than 40% since the U.S. attacked Iran in late February, leading to the disruption in oil shipping through the Strait of Hormuz. Diesel fuel prices are $6.069 a gallon – the highest ever recorded average price in the United States.
In New Jersey, a gallon of regular unleaded gasoline cost an average of $4.388 on Friday, which is a 38-cent increase from a month ago, and $1.22 higher than a year ago, according to AAA. The average cost of a gallon of diesel in New Jersey is $5.928 a gallon, which is 60 cents higher than a month ago and $2.307 higher than a year ago.
Friday’s inflation report heightened expectations that the Federal Reserve will increase interest rates at the next meeting of its Federal Open Market Committee on Sept. 16. The CEM Fedwatch, which tracks market expectations for the Fed interest rate decisions, now puts the probability of an interest rate increase at 86.9%, up from 60.4% a week ago.
Gasoline prices are not the only reason for worsening inflation. The cost of shelter rose 0.3% on a monthly basis in August, after rising 0.1% in July. Food prices were up 0.1% in August, the same as in July. Prices for used cars and trucks increased 0.4% in August, the same as July, and new vehicle prices rose 0.3% following a 0.1% increase in July.
Prices for major appliances rose 1.4% in August; airline fares were up 2.7%; and wireless phone service rose 4.9%.
On an annual basis, notable cost increases have occurred in the price of gasoline (+27.4%) and airline fares (+23.4%) in the past 12 months, according to the CPI. Between July 2025 and August 2026 food prices increased 2.7%; shelter costs increased 3.0%; electricity increased 3.8%, piped gas service increased 4.4%; and clothing prices increased 3.6%.
