U.S. consumer prices rose 3.7 per cent in the year through August, an uptick in inflation driven by gas prices, a report released on Wednesday reveals. 

The development has caused Federal Reserve officials to be wary about the outlook for inflation, with a more closely watched index that strips out volatile food and fuel prices.

The report is the last major data released by the Federal Reserve official before its September 19-20 policy meeting. 

In the month under review, the consumer price index climbed 3.7 per cent, faster than the 3.2 per cent July reading and slightly quicker than the 3.6 per cent expected by economists. 

According to the report, the core price index climbed 4.3 per cent from a year ago after removing food and fuel costs, which can jump around a lot from month to month. 

The price index was better than the previous reading, but on a monthly basis, the core measure climbed faster than economists expected — rising 0.3 per cent, up from 0.2 per cent in each of the previous two months. 

Although central bankers are widely expected to leave interest rates unchanged at their gathering, they will probably debate whether one more rate move might be warranted later this year.

The Federal Reserve officials have already raised interest rates to a range of 5.25 to 5.5 per cent, up sharply from near-zero as of March last year. 

The higher borrowing costs are meant to gradually slow the economy — but they take time to have their full effect, and are still trickling through to make it tougher and more expensive to use credit to buy a house, lease a car or expand a business.

Policymakers at the Federal Reserve want to avoid raising rates so much that the delayed effects add up to tank economic growth, but they also want to avoid doing too little and allowing inflation to become a lasting feature of the U.S. economy.

Next week, central bankers will release a fresh set of economic projections following their meeting, and this showed that they could still expect to make one more quarter-point increase this year, before lowering rates by the end of 2024, some economists think.

The central bank will receive one more consumer price index inflation report before it gathers in October. 

During the meeting, some factors could push inflation higher before the end of the year, or at any rate, making it harder for inflation to slow down, just as new data and a methodological change could push up consumer price index inflation starting next month.