U.S. inflation accelerated in August as renewed fighting in the Middle East drove up gasoline prices, with consumer prices rising 0.4% from July, the Labor Department said Friday. The report increased pressure on the Federal Reserve to lift its benchmark interest rate next week, a move that could raise mortgage and auto loan costs in the months ahead.

The consumer price index was 3.4% higher than a year earlier, matching July’s annual rate. The monthly increase was four times July’s 0.1% gain, showing that inflation remained elevated more than five years after prices surged as the economy emerged from the pandemic.

Gasoline was not the only source of higher costs. Prices for appliances, car repairs and wireless phone services also increased. Diesel prices reached record highs above $6 a gallon, raising shipping costs for groceries and other goods, while airline fares climbed 2.7% from July and more than 23% from a year earlier.

Core prices, which exclude volatile food and energy costs, rose 2.4% from a year earlier, down from 2.5% in July and marking a third consecutive decline. On a monthly basis, however, core prices increased 0.3%, the largest gain since April. Federal Reserve Chair Kevin Warsh and other officials had indicated that continued disinflation would be needed to keep rates unchanged. “Today’s August report did not deliver that,” Nationwide chief economist Kathy Bostjancic said.

Wall Street investors placed the probability of a Federal Reserve rate increase on Sept. 16 at more than 80%, according to CME Fedwatch, up 10 percentage points from Thursday. Longer-term borrowing costs were also elevated: the 10-year Treasury yield reached a nearly three-year high Thursday and traded at 4.9% Friday, despite Treasury Secretary Scott Bessent’s stepped-up bond buybacks intended to keep those rates lower.

The price increases came seven weeks before the midterm elections, with affordability a prominent concern for voters. President Donald Trump said Wednesday that every American adult would receive a $5,000 payment if Republicans retain control of Congress. The proposal would require congressional approval and could add to inflation.