Consumer Prices Increase Slightly In August, Inflation On Rise, New Data Says

WASHINGTON, D.C. — U.S. consumer prices increased by a moderate 0.2 percent in August, making the annual inflation rate 1.1 percent, slightly higher than earlier in the year, the Labor Department reported Friday.

The Consumer Price Index report showed rental and other housing-related costs continue to lead the price parade. The shelter category is up 3.4 percent in a year. Other big gainers have been auto insurance, which is up 6.5 percent and medical care, up 4.9 percent.

Most important in the latest report, however, may be the reading for so-called core inflation, which doesn't include volatile food and energy prices. That has gone up 2.3 percent in a year — a number that is more in agreement with the Federal Reserve's goal for prices.

The Fed will meet next week to decide whether to increase interest rates for only the second time since last December. A move up is more likely if inflation is seen accelerating.

The CPI showed that used cars, minivans and SUVs continue to get cheaper, with that category down for the sixth consecutive month. Household furnishings, recreation expenses and airline fares also got less expensive.

Analysts continue to be surprised about the lack of inflation for food, with that important category showing no change at all in a year through September. If restaurants are excluded, food at home has been getting less costly.

Energy costs were stable in September, with a drop in gasoline prices offsetting some increase for natural gas and electricity.

Overall, consumers have generally benefited from soft prices so far this year, although housing is more expensive. But there is increasing evidence that price pressure is heading up, if gradually.

By Denny Gulino, MNI

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