A hotter-than-expected inflation reading strengthened the case for the Federal Reserve to raise interest rates next week for the first time in three years.

Markets now see a rate hike as close to a sure thing after the Labor Department reported that core prices, which exclude food and energy, rose 0.3% from July, above what analysts had expected. The reading broke two months of mildly encouraging data that had tentatively validated central bank forecasts that inflation would slow in the second half of the year as tariff effects faded.

Three Fed presidents dissented in favor of higher rates at the central bank's meeting in July. Since then, three Fed governors, including two last week, suggested they could back higher rates at their policy-setting meeting next week if incoming data suggested inflation wasn't moderating sufficiently.

Fed Chairman Kevin Warsh moved expectations last month at the central bank's Jackson Hole conference, when he said he saw little evidence that borrowing conditions were restraining the economy and that the summer's better inflation readings hadn't convinced him the underlying trend was improving. Investors put the odds of an increase next week at around 60% after the speech, up from 35% before it. Those odds climbed to around 90% on Friday, after the report weakened the case officials who favored waiting had been making.

Officials have said that a quarter-point increase wouldn't do much on its own to bring inflation down. The larger question is what a move would signal about where the Fed thinks rates belong, and whether Warsh-who has argued that the central bank shouldn't tell markets what comes next-elaborates on this point next week.