Consumer prices rose slightly in August due to higher gas prices, another sign the weak economy is keeping inflation in check.
Excluding volatile food and energy prices, the so-called “core” Consumer Price Index also rose slightly over the 12 months ending in August, but is well within the Federal Reserve’s comfort zone. That means the central bank faces little pressure to raise its benchmark interest rate, a step it takes to ward off high inflation. The Fed has reduced the interest rate it charges banks for overnight loans to record low of nearly zero in an effort to revive the economy.
The Labor Department said that the CPI rose 0.4 percent in August, after a flat reading in July. Wall Street economists expected a 0.3 percent increase, according to a survey by Thomson Reuters.
Prices fell 1.5 percent in the past year, as gas prices dropped sharply from record levels last summer.
The core price index rose 0.1 percent, matching expectations.
It rose 1.4 percent in the 12 months ending in August, the smallest increase in more than five years.
A 1.3 percent drop in the price of cars last month, the steepest fall in nearly 37 years, held back the core index. (AP)
