US consumer prices accelerate in August on gasoline

investing.com:

By Lucia Mutikani

WASHINGTON (Reuters) — U.S. consumer prices increased by the most in more than a year in August amid a surge in the cost of gasoline, but a moderate rise in underlying inflation could encourage the Federal Reserve to keep interest rates on hold next Wednesday.

The consumer price index increased by 0.6% last month, the largest gain since June 2022, the Labor Department said on Wednesday. The CPI had risen 0.2% for two straight months.

Gasoline prices accelerated in August, peaking at $3.984 per gallon in the third week of the month, according to data from the U.S. Energy Information Administration. That compared to $3.676 per gallon during the same period in July.

In the 12-months through August, the CPI jumped 3.7% after climbing 3.2% in July. While that marked the second straight month of a pick up in annual inflation, year-on-year consumer prices have come down from a peak of 9.1% in June 2022. The Fed has a 2% inflation target.

Economists polled by Reuters had forecast the CPI increasing 0.6% last month and advancing 3.6% year-on-year. The report was published a week before the Fed's rate decision and followed data this month showing an easing in labor market conditions in August.

Excluding the volatile food and energy components, the CPI increased 0.3% amid declining prices for used cars and trucks. The so-called core CPI had increased 0.2% for two consecutive months. Though rents continued to increase, the trend is cooling and a further slowdown is expected as more apartment buildings come on the market.

In the 12 months through August, the so-called core CPI increased 4.3%. That was the smallest year-on-year rise since September 2021 and followed a 4.7% gain in July.

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