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Consumer prices in US increased more than forecast in August
[WASHINGTON] The cost of living in the US rose more than projected in August on higher shelter and health-care prices, indicating that inflation continues to move closer to the Federal Reserve's goal.
The consumer-price index climbed 0.2 per cent after being little changed the previous month, Labor Department figures showed Friday in Washington. The median estimate of economists surveyed by Bloomberg was for a 0.1 per cent advance. Excluding volatile food and fuel costs, the so-called core measure rose a bigger-than-forecast 0.3 per cent from a month earlier.
Stabilizing energy prices, the diminishing influence of the strong dollar and nascent wage gains are helping to gradually push inflation higher. While most economists and investors expect the central bank to leave interest rates unchanged when policy makers meet next week, faster inflation would bolster the case for a hike later this year.
"Inflation pressures are building gradually," Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida, said before the report.
"There's really not much inflation in goods. Where we're seeing price pressures is in rents and health care. Wage pressures are building." Expenses for shelter climbed 0.3 per cent. Owners-equivalent rent, one of the categories designed to track rental prices, also rose 0.3 per cent.
Prices for medical care services, which include health insurance, doctor visits and hospitalizations, increased 0.9 per cent in August, the most since November 1990. These readings often vary from results for this category within the Fed's preferred measure of inflation - the core personal consumption expenditures deflator. Economists attribute the discrepancy to different methodologies.
Bloomberg survey estimates for the consumer price index ranged from no change to a gain of 0.2 per cent.
The consumer price gauge increased 1.1 per cent in the 12 months ended in August, after a 0.8 per cent year-over-year advance the prior month.
The month-over-month gain in the core CPI measure follows a 0.1 per cent gain in July. It increased 2.3 per cent from August 2015, after rising 2.2 per cent in the prior 12-month period.
The median projection in the Bloomberg survey was for the core gauge to rise 0.2 per cent from the previous month, and to climb 2.2 per cent from the prior year.
The Fed's preferred gauge of inflation, which is the Commerce Department's PCE measure, hasn't matched the central bank's 2 per cent goal since April 2012. It rose 1.6 per cent in July from a year earlier.
Energy and food costs were both little changed in August. Americans also paid roughly the same prices for new automobiles. Clothing prices increased 0.2 per cent.
Airfares decreased 0.1 per cent, following a 4.9 per cent drop in July.
The CPI is the broadest of three price gauges from the Labour Department because it includes all goods and services. About 60 per cent of the index covers prices consumers pay for services from medical visits to airline fares, movie tickets and rents.
The cost of living took more of Americans' paychecks in August, a separate report from the Labour Department showed Friday. Hourly earnings adjusted for inflation fell 0.1 per cent from the prior month. They were up 1.3 per cent over the past 12 months.