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U.S. Consumer Prices Below Forecast in August

September 17, 2013 Financial Markets

economics consumer prices
Inflation came in under expectations in August, sparking new worries.

The cost of living in the U.S. increased in August at a lower-than-estimated rate, indicating inflation is far from reaching the Federal Reserve's goal.

The consumer price index rose by 0.1 percent in August, the smallest gain in three months, following a 0.2 percent increase in July. Analysts had expected a gain of 0.2 percent. The core measure, which excludes food and fuel, also rose 0.1 percent last month.

The increase in consumer prices last month was led by medical care, prescription drugs, rents and tobacco. Declines in utility gas service, gasoline and airfares limited the advance.

On a yearly basis, consumer prices increased 1.5 percent, down from a year-on-year gain of 2 percent in July.

The core CPI climbed 1.8 percent from August 2012, following a 1.7 percent advance in the prior 12-month period. The figures come as Fed policy makers meet today and tomorrow to debate whether economic growth is strong enough to begin slowing the pace of bond purchases.

Central bankers have said they are also watching prices to ensure the U.S. doesn't slip into a long period of diminishing increases, or disinflation, which damages the expansion.

Fed policy makers have warned of the risks of prolonged inflation below their 2 percent target, while economists project the central bank will start reducing its $85 billion in monthly asset purchases as soon as this week as the economy shows improvement.

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Original headline: U.S. consumer prices rise below forecast in August

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