Consumer prices rise 0.3 percent in August, largest gain
in four months
Wed Sep 18, 9:16 AM ET
story.news.yahoo.com
By JEANNINE AVERSA, Associated Press Writer
WASHINGTON - Consumer inflation rose 0.3 percent in August, the largest
advance in four months, lifted by higher prices for energy products, clothing and
tobacco.
The advance in the Consumer Price Index, the
government's most closely watched inflation gauge, followed a tiny 0.1 percent
rise in July, the Labor Department reported Wednesday.
Excluding energy and food prices, which tend to bounce around a lot from
month to month, the "core" rate of inflation also rose by 0.3 percent in August,
up from a 0.2 percent increase in the previous month.
The latest readings on inflation were slightly worse than the 0.2 percent rise
that many analysts were predicting for both overall inflation and the core
inflation rate.
The Federal Reserve, trying to restore the economy back to
full health after falling into recession last year, at its last meeting said that
economic weakness is a bigger risk for the economy than inflation.
In making that determination, Fed policy-makers held the door open to future
interest rate reductions if economic conditions worsen.
So far this year, the Fed has decided to hold short-term rates at four-decade
lows. Many analysts predict the Fed will do so again at its next meeting on
Sept. 24.
The 0.3 percent rise in overall consumer prices in August was the largest
increase since April, when they rose by 0.5 percent.
Energy prices last month jumped by 0.6 percent, following a 0.4 percent
increase in July.
Crude oil recently has been bumping up against dlrs 30 per barrel - as
tensions between the United States and Iraq heightened worries about possible
supply disruptions. The Organization of the Petroleum Exporting Countries
opens a meeting Thursday to discuss production levels.
OPEC ministers were largely lined up Wednesday against
an oil production increase being pushed by consumers in the West, but the
most important player, Saudi Arabia, would not say publicly which way it will
go.
The CPI report showed that fuel oil prices shot up 2.1 percent in August.
Electricity costs went up by 0.6 percent and gasoline prices rose 0.5 percent.
Natural gas prices went down by 0.3 percent.
For the first eight months of this year, overall consumer prices rose at an
annual rate of 2.7 percent, compared with a 1.6 percent increase for all of 2001.
A big factor behind this advance is rising energy prices. Last year, energy
prices fell 13 percent. So far this year, they are rising at a rate of 13.5 percent.
Another factor in the rise in consumer inflation in August was a strong 1.1
percent increase in clothing costs. But that reflected the introduction of more
expensive fall and winter merchandise. For the 12 months ending in August,
apparel prices have fallen by 1.7 percent.
Also contributing August's advance was a 2.4 percent increase in prices for
tobacco and other smoking products. Those prices tend to jump around a lot
each month.
Food prices dipped by 0.1 percent in August, an improvement from July's 0.2
percent increase.
And, prices for medical care rose by a modest 0.2 percent in August, compared
with a sharp 0.7 percent advance the month before. Still, for the 12 months
ending August, medical care costs have gone up a sizable 4.7 percent.
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