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August US Consumer Prices Rise as Expected, Core Prices Rise Faster Than Expected

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The US seasonally adjusted consumer price index, a measure of inflation, rose by 0.4% in August, as expected, and following a 0.1% increase in July, according to data released by the Bureau of Labor Statistics.

Core CPI, which excludes food and energy prices, rose by 0.3%, faster than the consensus estimate for a 0.2% increase. Core CPI rose by 0.2% in July.

Food prices increased by 0.1%, while energy prices jumped by 2.1%. Gasoline prices rebounded by 3.9%.

Owners' equivalent rents increased by 0.2%, as did regular rents. There were also notable price gains for airline fares, which increased by 2.7%, new vehicles, which rose by 0.3%, and used vehicles, which rose by 0.4%.

CPI excluding food, energy and shelter rose by 0.3%, the same as in the previous month.

The year-over-year rate for overall CPI remained at 3.4%, while core CPI slowed to 2.4% year-over-year from 2.5% in the previous month.

The monthly consumer price index, or CPI, reported by the Bureau of Labor Statistics, measures the index level of prices paid by consumers for a basket of goods and services such as food, energy, vehicle, medical care, apparel, and housing.

The core measure, which excludes food and energy due to their volatility, is closely watched by markets and the Federal Reserve as a sign of underlying inflation pressures.

Rising inflation is a sign of strong US consumer demand, but both stocks and bond normally react negatively to level of price growth that would necessitate higher interest rates.

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