The robust gain in retail sales added to a string of hot economic data in August, supporting the notion the U.S. economy is strong enough to withstand higher interest rates headed into the Fed's policy decision, analysts say.

Retail sales rose by 1.2% in August, rebounding from its decrease in July. Paired with last month's stronger-than-expected jobs gains, the report offered signals the economy remained on firm footing.

"The economy is healthy enough to withstand a few rate hikes, keeping the Federal Reserve's attention firmly on the upside risks to inflation," wrote Michael Pearce, chief U.S. economist at Oxford Economics.

In July, retail sales figures raised questions about the growth of the economy after the data followed a weak payroll print. However, economists and Fed officials noted the drop was likely a blip traced to Amazon's Prime Day and related promotions that happened in June instead of July. Following that, the U.S. added 162,000 jobs in August, which was well above forecasts and reassured officials and economists that growth was stable.

Overall, consumer demand has been largely resilient in the face of several supply shocks, most recently rising oil prices tied to the conflict in Iran. Against that backdrop, the central bank remains cautious on inflation pressures broadening beyond just energy. The control group in Wednesday's retail sales report, which excludes volatile categories including gasoline to assess true consumer demand, grew about 1.4% in August.

"Policy is currently only slightly restricting aggregate demand, and it may not take much acceleration in inflation to nudge me into supporting tighter policy," Fed governor Christopher Waller said on Sept. 3.

Not long after Waller's comments, the Labor Department's consumer price index data showed that core inflation, which excludes food and energy prices, came in stronger than expected. This boosted expectations that the Fed would increase rates by 25 basis-points. Odds for a rate increase were around 93% Wednesday, according to CME's FedWatch tool.

"Broadly, activity is in a good place, and I don't think anything that we've learned in the last few months should really change that," said Aditya Bhave, BofA Securities head of U.S. economics.