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U.S. Core Consumer Price Growth Accelerates To 11-Year High In August

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With higher prices for shelter and medical care partly offset by a steep drop in energy prices, the Labor Department released a report on Thursday showing just a modest increase in U.S. consumer prices in the month of August.

The Labor Department said its consumer price index inched up by 0.1 percent in August after rising by 0.3 percent in July. The uptick in prices matched economist estimates.

Energy prices showed a substantial pullback during the month, plunging by 1.9 percent in August after jumping by 1.3 percent in July, while food prices were unchanged for the third straight month.

Excluding food and energy prices, core consumer prices rose by 0.3 percent in August, matching the increases seen in the two previous months. Economists had expected core prices to rise by 0.2 percent.

The increase in core prices reflected the higher prices for shelter and medical care as well as a spike in prices for used cars and trucks.

Prices for recreation and airline fares also increased during the month, while prices for new vehicles and household furnishings and operations declined.

The report showed the annual rate of consumer price growth slowed to 1.7 percent in August from 1.8 percent in July, while the annual rate of core price growth accelerated to 2.4 percent from 2.2 percent.

"The further rise in core CPI inflation to an 11-year high of 2.4% in August won't stop the Fed from cutting interest rates again next week," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "But it does provide further reason to believe that market expectations of significant further easing will ultimately be disappointed."

A separate report released by the Labor Department on Wednesday showed a modest uptick in U.S. producer prices in the month of August.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in August after rising by 0.2 percent in July. Economists had expected prices to come in unchanged.

Excluding food and energy prices, core producer prices rose by 0.3 percent in August after edging down by 0.1 percent in July. Core prices had been expected to increase by 0.2 percent.

Compared to the same month a year ago, producer prices in August were up by 1.8 percent, reflecting a modest acceleration from the 1.7 percent growth seen in July.

The annual rate of growth in core consumer prices also accelerated to 2.3 percent in August from 2.1 percent in the previous month.

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