U.S. inflation stayed stubbornly high in August, bolstering the case for the Federal Reserve to raise interest rates at its meeting next week. The Consumer Price Index report showed overall inflation remained elevated at an annual pace of 3.4 percent, after a 0.4 percent rise from July. "Core" inflation rose 0.3 percent in August, or 2.4 percent from a year earlier.

The data is factoring heavily into the Fed's upcoming policy deliberations. Policymakers stipulated this summer that if inflation did not soon moderate, they stood ready to raise rates. Many have run out of patience.

Policymakers are also digesting new risks. The global price of oil is back up above $100 a barrel as the Iran war continues to disrupt supply. President Trump has reignited a trade war with Canada. And on Wednesday, he vowed to distribute a $5,000 check to every American adult if Republicans keep control of Congress in the November midterm elections.

In the wake of Friday's data release, traders now see 90 percent odds that the Fed raises rates by a quarter of a percentage point next week. Since January, rates have stood at a range of 3.5 percent to 3.75 percent.