Fresh government data released Thursday shows mounting pressure on the U.S. economy, with inflation climbing at its fastest pace since January while unemployment claims hit their highest level in nearly four years.
The combination of rising prices and a weakening job market is stoking fears of stagflation, where growth slows as the cost of living continues to rise.
The Department of Labour reported that the Consumer Price Index increased by 0.4% in August, pushed up mainly by higher housing and food costs.
This drove the annual inflation rate to 2.9%, up from 2.7% in July, marking the sharpest pace since the start of the year. Core inflation, which excludes food and energy, stayed at 3.1%, the same as July.
Economists say the figures suggest companies are shifting extra expenses from President Donald Trump’s tariffs to shoppers, keeping prices elevated across households.
Alongside the inflation report, the job market showed signs of strain. Initial applications for state unemployment benefits rose sharply by 27,000 in the week ending September 6, reaching a seasonally adjusted 263,000.
That was well above the 235,000 claims analysts had expected and marked the highest level since October 2021.
The four-week average of claims, considered a steadier measure, also climbed to 240,500. The jump in jobless claims signals reduced hiring momentum and growing pressure on workers.
The troubling data has heightened attention on the Federal Reserve, which meets next week.
While inflation remains stubborn, expectations are rising that the central bank could move to cut its benchmark interest rate in an effort to shield the economy from further slowdown.
