However, the Federal Funds Rate determines how much banks charge each other when they lend reserves overnight. So, changes (and expected changes) to Fed interest rates, and the resulting impact on the prime rate and Treasury yields, influence how much shoppers and businesses pay in interest and have left over to spend.

Fresh worries about inflation soured Americans on the economy in early August, underscoring lingering anxiety about the highest U.S. tariffs in decades and a further rise in unemployment.

The data complicates the picture for an anticipated interest-rate cut at the Federal Reserve’s next meeting in September by nudging the central bank’s inflation gauge in the wrong direction.