WASHINGTON – U.S. consumer prices rose in August by the most since January, likely reassuring the Federal Reserve about the economy's strength as it considers raising interest rates.
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The consumer-price index, measuring what Americans pay for everything from medicine to home rent, grew 0.4% in August from a month earlier, the Labor Department said Thursday.
Much of the gain was due to a sharp rise in gasoline prices after Hurricane Harvey, which temporarily shut Texas refineries. But prices for other items also rose. Excluding food and energy costs, so-called core prices grew 0.2%, the most since February.
Economists surveyed by The Wall Street Journal expected a 0.3% gain in overall prices and a 0.2% increase in core prices.
The report offered the last major snapshot of inflation before Federal Reserve policy makers meet next week and it will likely influence their decision on whether to raise short-term interest rates before year end. Fed officials have been waiting for signs of rising inflation--coupled with low unemployment and steady job growth--before raising interest rates again.
Inflation remains subdued overall and weaker than it started earlier in the year. Overall prices rose 1.9% in the 12 months through August, up from July's rate of 1.7%. Core prices climbed 1.7% in the year through August, where it has stayed through summer.
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But Thursday's report offered signs that inflation pressures are starting to pick back up after months of weakness that Fed officials have largely attributed to temporary factors, such as an increase in cellphone plan costs.
Energy prices rose 2.8% last month, driven by higher gasoline prices. Food prices gained 0.1%. Shelter prices, a measure of rent and mortgage payments, increased 0.5% over the month.
Meanwhile, Americans' incomes dipped last month, the Labor Department said in a separate report Thursday. Average weekly earnings, adjusted for inflation, fell 0.6% from a month earlier. While hourly earnings rose, higher inflation more than offset the gain, and the average work week fell.
The Labor Department's report on consumer prices can be found at: http://www.bls.gov/news.release/pdf/cpi.pdf
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(END) Dow Jones Newswires
September 14, 2017 08:45 ET (12:45 GMT)