Higher gas, housing costs lift US consumer prices 0.4%
Washington — Higher gas and housing costs boosted U.S. consumer prices 0.4 percent in August, the most in seven months. The increase suggests inflation could be picking up, but the figures may have been distorted by Hurricane Harvey.
Consumer prices climbed 1.9 percent last month compared with a year earlier, the Labor Department said Thursday, up from an annual gain of 1.7 percent in August and the second straight increase. Excluding volatile energy and food costs, prices rose 0.2 percent in August and 1.7 percent from a year earlier.
The government said Harvey had a “very small effect” on its ability to gather data. But it would not say whether last month’s gas price increase resulted from the storm. Harvey disrupted oil refineries on the Gulf Coast and pushed up average gas prices nationwide, though the increase occurred at the end of the month. The government collects price data throughout the month.
Gas prices jumped 6.3 percent last month, the largest increase since January. Housing costs were the other main driver of inflation last month: Hotel prices leapt 4.4 percent, the largest gain on records dating from 1997, after falling by the most on record in July. Rents rose 0.4 percent, the most in nearly a year.
Even with last month’s increase, inflation remains below the Federal Reserve’s 2 percent target, where it has been for five years. That has complicated the Fed’s plans to lift short-term interest rates one more time this year.
Most troublesome for the Fed was that consumer price inflation slowed this year through June. Prices rose 2.7 percent in February from a year earlier, but the annual rate then fell to 1.6 percent in June. Fed chair Janet Yellen attributed the drop to temporary factors, including sharp falls in the price of mobile phone services.
The Fed typically raises its benchmark interest rate to ward off inflation. Some economists questioned why the Fed would raise rates with price increases slowing. Many analysts previously expected the Fed’s next increase to occur in December, but now they’re not so sure.
An alternative inflation gauge preferred by the Fed slipped even lower, to 1.4 percent in July.
The cost of clothing, auto insurance, and health care rose last month. Boys’ clothing prices jumped 9.6 percent, the biggest monthly gain on record.
But airplane fares, used cars and the cost of mobile phone services all fell.
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