New figures reveal that consumer prices in the US jumped at the fastest pace in seven months, mainly due to soaring costs of housing and food. At the same time, first-time applications for unemployment benefits surged, signaling a weakening job market that may disappoint newcomers.

The Labor Department confirmed this steep rise in the Consumer Price Index, marking the biggest year-on-year inflation spike since January. Experts say this trend, combined with job insecurity, could push the country toward stagflation—a dangerous mix of high inflation and low employment growth.

Officials noted that part of the inflation pressure comes from businesses passing on higher costs linked to President Donald Trump’s tariffs. Meanwhile, a rebound in travel demand has also inflated expenses, though tourism earlier suffered due to boycotts and immigration restrictions.

For Pakistani youth planning to move to America, these numbers reveal a hidden risk. The US may still be wealthy, but the reality is that newcomers could struggle to find work while battling skyrocketing living costs.

The rising cost of living and weakening job prospects in the United States paint a sobering picture for Pakistani youth who view migration as a ticket to success. While many dream of stable employment and high earnings, the reality on the ground shows a country grappling with inflation, tariffs, and unstable job conditions.

The increase in unemployment claims is particularly alarming, as it suggests that even American citizens are struggling to secure jobs. For foreign workers—who often face additional hurdles—the risks are far greater. The combination of costly housing, expensive food, and uncertain employment makes survival difficult, let alone achieving financial progress.

This should serve as a wake-up call for young Pakistanis investing their savings into visa applications or relying on agents who promise guaranteed jobs. The truth is that America’s economy is going through a phase where opportunities are shrinking, not expanding. Instead of chasing uncertain dreams abroad, youth may need to explore opportunities within Pakistan’s growing sectors, or carefully weigh the risks before making such life-altering decisions.

"Even though a September cut is a fait a compli, the future trend looks less certain," said Sung Won Sohn, a finance and economics professor at Loyola Marymount University, as reported by Reuters.

"The interaction of rising inflation and softening employment creates a difficult policy dilemma for the Fed. Cutting rates too quickly risks embedding tariff-driven inflation, while delaying cuts risks amplifying unemployment."

The CPI rose 0.4% last month, the biggest gain since January, after increasing 0.2% in July, the Labor Department s Bureau of Labor Statistics said. The CPI was driven by a 0.4% jump in the cost of shelter. Food prices increased 0.5%, with prices at the supermarket soaring 0.6%.

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Fruit and vegetable prices increased 1.6% as tomatoes surged 4.5%, the biggest gain since January 2020. Apples and bananas were also more expensive. Beef prices rose 2.7% and increased 13.9% from a year ago. Coffee prices jumped 3.6% and were up 20.9% from a year ago. Tariffs likely accounted for some of these increases. Past droughts that decimated the national herd were also probably behind the higher beef prices.

Labor shortages at farms as the Trump administration rounds up undocumented migrants for deportation were also adding to higher food prices, economists said. Gasoline prices rose 1.9%.

In the 12 months through August, the CPI advanced 2.9%, the largest increase since January, after climbing 2.7% in July.

Economists polled by Reuters had forecast consumer prices would rise 0.3% in August and increase 2.9% on a year-over-year basis.

A bar chart that ranks a set of major product categories by price increases in the past year.

Financial markets have fully priced in a quarter-percentage-point reduction in rates next Wednesday, with the Fed expected to deliver two similar-sized additional cuts this year.

The U.S. central bank, which tracks the Personal Consumption Expenditures (PCE) price indexes for its 2% inflation target, paused its easing cycle in January because of uncertainty over the inflationary impact of import duties.

The pass-through from import duties has been gradual, but businesses have now depleted their pre-tariff inventories. Business surveys have for some time been signaling imminent price increases. Economists were divided on whether the pass-through from tariffs would be a one-off event or prolonged.

Stocks on Wall Street rose. The dollar slipped against a basket of currencies. U.S. Treasury yields fell.

THE INCREASE IN INFLATION WAS BROAD

Excluding the volatile food and energy components, the CPI rose 0.3% after a similar gain in July. The rise in the so-called core CPI inflation was broad. Core goods prices increased 0.3%, with tariff-exposed products like new motor vehicles, apparel and household furnishings and operations costing more.

Used cars and trucks prices rose 1.0%. The cost of services increased 0.3% as airline fares soared 5.9%, and hotel and motel room prices surged 2.3%. Owners  equivalent rent rose 0.4%. In the 12 months through August, the core CPI inflation increased 3.1%, matching July s rise. Healthcare costs fell as a recent sharp rise in dental services reversed.

A line chart comparing inflation metrics over the past five years.

"We suspect the broadening cost burden from tariffs will keep the monthly pace of goods inflation elevated through early next year, but the spillover into services inflation should be limited by the weakness in the jobs market, choosier consumers and anchored inflation expectations," said Sarah House, a senior economist at Wells Fargo.

Economists estimated that core PCE inflation increased 0.2% in August after rising 0.3% for two straight months, which would translate to an annual increase of 3.1%. That would be an acceleration from a 2.9% increase in July.

The labor market s struggles were underscored by a separate report from the Labor Department showing initial claims for state unemployment benefits jumped 27,000 to a seasonally adjusted 263,000 for the week ended September 6, the highest level since October 2021.

But the data could have been impacted by the Labor Day holiday. There was also an unexplained 15,304 surge in unadjusted applications in Texas. Economists speculated some people could have incorrectly filed regular claims for the state s Disaster Unemployment Assistance (DUA) following the July floods that was extended to the end of September.

"The magnitude of the Texas spike looks similar to a natural disaster. One possibility is that it is related to the early July flooding in Texas," said Abiel Reinhart, an economist at J.P. Morgan. "DUA applications are not counted in the regular state jobless claims figures, but what is possible is that many people filed a normal claim by mistake."

A column chart titled "US unemployment claims" that tracks the metric over a recent period.

Still, labor market conditions have weakened. The number of people receiving benefits after an initial week of aid was unchanged at 1.939 million during the week ending August 30, the claims report showed.

The government said this week that nonfarm payrolls could have been overstated by 911,000 jobs in the 12 months through March. That followed the release last Friday of the monthly employment report, which showed job growth almost stalled in August and the economy shed jobs in June for the first time in four and a half years amid tariff uncertainty.

"Even if the increase in initial claims overstates any renewed weakness in the labor market, claims have been drifting higher," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.