U.S. Consumer Prices Climb 0.4% In August, Slightly More Than Expected

(RTTNews) - Following yesterday's report showing an unexpected dip by producer prices, the Labor Department released a separate report on Thursday showing U.S. consumer prices rose by slightly more than expected in the month of August.

The Labor Department said its consumer price index climbed by 0.4 percent in August after inching up by 0.2 percent in July. Economists had expected consumer prices to rise by 0.3 percent.

The report also said the annual rate of consumer price growth accelerated to 2.9 percent in August from 2.7 percent in July, in line with economist estimates.

The slightly bigger than expected monthly increase by consumer prices partly reflected a continued advanced by shelter costs, which rose by 0.4 percent in August after edging up by 0.2 percent in July.

Energy prices also grew by 0.7 percent during the month amid a surge by prices for gasoline, while food prices climbed by 0.5 percent.

The Labor Department said core consumer prices, which exclude food and energy prices, rose by 0.3 percent in August, matching the increase seen in July as well as expectations.

The annual rate of core consumer price growth in August was unchanged from the previous month at 3.1 percent, in line with economist estimates.

The monthly increase by core consumer prices reflected the higher prices for shelter as well as higher prices for airline fares, used cars and trucks, apparel, and new vehicles.

Meanwhile, the report said prices for medical care, recreation, and communication were among the few that decreased in August.

"In today's numbers, we are seeing some impact from tariffs, especially with higher prices on cars and clothes," said Jeffrey Roach, Chief Economist for LPL Financial. "A sticky category not as connected to trade is insurance which we expect to weigh on inflation for the next few months."

He added, "The hot inflation print will not likely change the Fed's plan to cut rates in September but it's possible the Fed will hold in October if inflation expectations no longer look well-contained."

The Labor Department released a separate report on Wednesday unexpectedly showing a modest decrease by producer prices in the U.S. in the month of August.

The report said the producer price index for final demand edged down by 0.1 percent in August after climbing by a downwardly revised 0.7 percent in July.

The dip surprised economists, who had expected producer prices to rise by 0.3 percent compared to the 0.9 percent jump originally reported for the previous month.

The Labor Department also said the annual rate of producer price growth slowed to 2.6 percent in August from a downwardly revised 3.1 percent in July.

Economists had expected the annual rate of producer price growth to remain unchanged compared to the 3.3 percent surge originally reported for the previous month.