WASHINGTON (AP) — Inflation slowed a bit last month as Americans ramped up their spending, though prices are still elevated and a challenge for many voters that will head to the polls for midterm elections in just over a month.
Consumer prices rose 3.4% in August compared with a year earlier, the Commerce Department said Wednesday, below the 3.7% economist expectations. On a monthly basis, prices climbed 0.3%, up from 0.1% in July, a sign prices that are still running hot.
Excluding the volatile energy and food categories, inflation also came in lower than expected, rising 3% in August from a year ago. And from July to August, core prices rose just 0.2%, up from 0.1% the previous month. Many economists feared core prices would rise more quickly month-to-month.
U.S. markets bounced higher immediately on the new inflation reading, with investors betting that an expected interest-rate hike from the U.S. Federal Reserve might be delayed.
Even so, inflation remains above the Federal Reserve's 2% target and the monthly increase in August suggests it isn't moving back toward the target anytime soon. The Fed lifted its key short-term interest rate two weeks ago for the first time in three years to combat inflation and most economists expect it will do so at least once more this year, possibly as soon as late next month.
“Inflation’s trend is lower but still not close to their target and not improving, either,” Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, said in an email.
Wednesday's report covered a key inflation gauge closely watched by the Fed, known as the personal consumption expenditures price index. It is similar to the higher-profile consumer price index, which was released earlier this month.
High prices have cast a pall on the U.S. economy, even as growth is mostly solid and the unemployment rate is low. On Tuesday, the Conference Board's consumer confidence survey fell to its lowest level since 2014, a period that includes both the Great Recession and a global pandemic.
Americans' paychecks are growing but not as quickly as prices.
Inflation for July was previously reported at 3.7% but was revised lower to 3.4% by the government as part of an update in how it measures price changes in several categories, including investment management, computer software and accessories, and legal services.
For example, the government previously put a heavy weight on some computer accessories that have jumped in price because of outsized demand from the AI buildout. The revisions lowered that weight and as a result, the higher prices for some computer equipment are not driving up this measure of inflation as much.
Despite elevated prices, Americans accelerated their spending last month, the government said, with spending jumping 0.9% from July to August, up from just 0.1% the previous month.
Some of that increase was likely fueled by wealthier Americans cashing in their gains from higher stock prices, a recent report from JPMorgan suggests. Other consumers may be taking on more debt to support their spending.
After-tax incomes, adjusted for inflation, were unchanged on a monthly basis in August, after rising 0.3% in July, the report said.
Healthy consumer spending could fuel a pickup in growth. In a separate report Wednesday, the government said the economy expanded at a 2.2% annual pace in the July-September quarter. Analysts expect that to pick up to a 3% rate in the current quarter.
People shop at the Apple store on Fifth Avenue on the day of Apple's launch of the iPhone 18 Pro, Friday, Sept. 18, 2026, in New York. (AP Photo/Angelina Katsanis)
TEL AVIV, Israel (AP) — A commercial plane traveling from Dubai in the United Arab Emirates to Israel was forced to make an emergency landing in Saudi Arabia on Wednesday, briefly raising concerns about a possible hijacking and prompting Israel to scramble warplanes.
Israeli media, citing security officials, said the incident stemmed from a feud between the plane’s two pilots, and everyone on board was safe. The plane landed in Tabuk, a civilian and military base in the kingdom.
The FlyDubai plane had transmitted an emergency alert, according to publicly available flight tracking information.
Around two and a half hours after departing from Dubai, it abruptly descended from 33,000 feet to 17,000 feet within a minute, before making an erratic circle close to the Jordanian border and eventually landing in Tabuk about an hour later, according to FlightRadar24.
A regional official briefed on the incident said a fight broke out in the cockpit and apparently involved pilots. It wasn’t immediately clear what had caused the fight, the official said.
A second official confirmed that Israel had scrambled warplanes, fearing a hijacking of a plane carrying dozens of its citizens. Israeli Prime Minister Benjamin Netanyahu has warned in recent days of unspecified, escalated security threats.
Both officials spoke on condition of anonymity because the incident was still under investigation.
Netanyahu’s office later said the situation was under control and Israel was working to bring the passengers home.
Emergency landings for personnel reasons are rare yet not unheard of. In 2022, two Air France pilots were suspended after fighting in the cockpit on a Geneva-Paris flight, though it did not have to be diverted and landed as planned.
Passengers told Israel’s Ch 12 by phone that they heard shouts from those sitting more forward on the plane who heard the altercation between the pilots, and the plane dipped steeply before landing in Saudi Arabia.
They also said that all the passengers are staying on the plane and that there is a heavy presence of Saudi security forces surrounding them.
FlyDubai later confirmed that flight FZ 1073 en route to Ben Gurion experienced an incident and landed safely in Tabuk on Wednesday.
“Our teams are working closely with the relevant authorities,” the carrier said. “Further updates will be issued as additional confirmed details become available.”
Flight-tracking data indicated that the plane was a Boeing 737 Max 8.
FlyDubai is the lower-cost sister carrier of Emirates airlines. The UAE has become a popular vacation destination for Israeli tourists since the countries normalized ties in 2020.
The low-cost carrier’s fleet relies entirely on variants of the 737, a twin-engine, single-aisle aircraft that is widely used by airlines around the world. It has nearly 100 of the planes, including 69 of the Max 8 variant.
Dubai International Airport, where the plane took off from, is by far the Middle East’s busiest airport and the world’s largest in terms of international travel. It handled a record 95.2 million passengers last year.
Israelis were targeted in a string of hijackings and airplane attacks by Palestinian militants in the 1960s and 1970s. Israel has not experienced a hijacking in decades but maintains some of the strictest airport security in the world, including often invasive check-in procedures for Israel-bound flights.
Commercial flights have flown between Israel and the United Arab Emirates since the countries normalized ties in 2020.
Magdy reported from Cairo and Metz from Jerusalem. Associated Press writer Adam Schreck in Bangkok contributed to this report.
Israeli passenger Haim Lazarovich, who experienced an emergency landing in Saudi Arabia, during a flight on FlyDubai plane, arrives at Ben Gurion International Airport, near Tel Aviv, Israel, Wednesday, Sept. 30, 2026. (AP Photo/Ariel Schalit)
Passengers who experienced an emergency landing in Saudi Arabia, during a flight on FlyDubai plane, arrive at Ben Gurion International Airport, near Tel Aviv, Israel, Wednesday, Sept. 30, 2026. (AP Photo/Ariel Schalit)
An FlyDubai plane carrying Israeli passengers who had earlier been aboard another FlyDubai aircraft that made an emergency landing in Saudi Arabia approaches Ben Gurion International Airport near Tel Aviv, Israel, Wednesday, Sept. 30, 2026. (AP Photo/Ohad Zwigenberg)
Passengers embark on a FlyDubai aircraft at Ben Gurion International Airport, near Tel Aviv, Israel, Wednesday, Sept. 30, 2026. (AP Photo/Ariel Schalit)
Passengers check in their luggage with FlyDubai at Ben Gurion International Airport, near Tel Aviv, Israel, Wednesday, Sept. 30, 2026. (AP Photo/Ariel Schalit)
Holding balloons people wait for the arrival of passengers at Ben Gurion International Airport, near Tel Aviv, Israel, Wednesday, Sept. 30, 2026. (AP Photo/Ariel Schalit)
A FlyDubai aircraft takes off from Dubai International Airport in Dubai, United Arab Emirates, Wednesday, Sept. 30, 2026. (AP Photo)
A plane takes off as a flydubai aircraft sits on the tarmac at Dubai International Airport in Dubai, United Arab Emirates, Wednesday, Sept. 30, 2026. (AP Photo)
FILE - Israeli tourists leave a FlyDubai plane which departed from Ben-Gurion International Airport in Tel Aviv and landed in Dubai, United Arab Emirates, Nov. 8, 2020.(AP Photo/Malak Harb, File)
