STORY: U.S. inflation unexpectedly rose in August, despite a drop in gas prices, which were offset by rising costs for rent, food and healthcare.

That's according to the Labor Department's consumer price index report on Tuesday, which showed CPI gained by 0.1% last month - when economists were expecting it to fall by 0.1%.

The hotter than anticipated report suggested that inflation could remain elevated for some time, giving the Federal Reserve reason to stay aggressive and carry out a third 75-basis-point interest rate hike at its policy meeting next week.

That sparked a sharp selloff in the stock market, snapping a four-day winning streak for the major indexes.

On a year-over-year basis, consumer prices increased by 8.3%, while economists were anticipating a rise of 8.1%, according to a Reuters poll.

While the 8.3% reading marked a deceleration from July's 8.5% rise, inflation is still running way above the Fed's 2% target, and has remained above 8% for six straight months.

The latest inflation numbers are a headache for the Biden administration and Democrats hoping to limit their losses in November's mid-term elections.

With only one more CPI report due before Election Day it is unlikely to fall below that 8% level before Americans head to the polls.