U.S. Consumer Price Growth Matches Estimates, Core Prices Rise Slightly More Than Expected

(RTTNews) - A closely watched report released by the Labor Department on Friday showed consumer prices in the U.S. increased in line with economist estimates in the month of August, although core prices rose by slightly more than expected.

The Labor Department said its consumer price index climbed by 0.4 percent in August after inching up by 0.1 percent in July.

A significant rebound in energy prices contributed to the price growth, with energy prices jumping by 2.1 percent in August after slumping by 1.5 percent in July.

Gasoline prices spiked by 3.9 percent in August after plunging by 2.9 percent in July, accounting for over a third of the total monthly increase in consumer prices.

Excluding the sharp increase in energy prices and an uptick in food prices, core consumer prices rose by 0.3 percent in August after edging up by 0.2 percent in July. Economists had expected core prices to rise by another 0.2 percent.

The Labor Department said higher prices for communication, lodging away from home, airline fares, education, and used cars and trucks contributed to the increase in core prices, while lower prices for motor vehicle insurance helped limit the upside.

"The upcoming interest-rate decision by the Federal Reserve is on a knife's edge, and the firmer core CPI reading in August pushes the central bank toward a hike next week," said Bernard Yaros, Lead U.S. Economist at Oxford Economics.

He added, "However, a rate increase this month is still no guarantee, as the Fed's preferred inflation measure will prove more benign."

The report also said the annual rate of consumer price growth was unchanged at 3.4 percent, while the annual rate of core consumer price growth dipped to 2.4 percent in August from 2.5 percent in July, which matched expectations.

A separate report released by the Labor Department on Thursday showed producer prices in the U.S. also increased in line with economist estimates in the month of August.

The Labor Department said its producer price index for final demand rose by 0.4 percent in August following a revised 0.1 percent uptick in July.

Economists had expected producer prices to climb by 0.4 percent compared to the unchanged reading originally reported for the previous month.

The report also said the annual rate of growth by producer prices surged to 5.4 in August from 4.8 percent in July. The annual rate of growth was expected to accelerate to 5.3 percent.