Break'n News - Consumer prices post smaller than expected increase in August

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Prices for an array of consumer goods rose less than expected in August in a sign that inflation may be starting to cool, the Labor Department reported Tuesday.

The consumer price index, which measures a basket of common products as well as various energy goods, increased 5.3% from a year ago and 0.3% from July. A month ago, prices rose 0.5% on the month.

Economists surveyed by Dow Jones had been expecting a 5.4% annual rise and 0.4% on the month.

Stripping out volatile food and energy prices, the CPI rose just 0.1% for the month vs. the 0.3% estimate, and 4% on the year against the expectation of 4.2%.

The 5.3% annual increase still keeps inflation at its hottest level in about 13 years, though the August numbers indicate the pace may be abating.

Markets rallied following the release, with stock index futures well off their morning lows.

Energy prices accounted for much of inflation increase for the month, with the broad index up 2% and gasoline prices rising 2.8%. Food prices also were up 0.4%. Energy is up 25% from a year ago and gasoline has surged 42% during the period.

However, excluding those two categories resulted in the slowest monthly CPI increase since February.

Used car and truck prices, which had been a major feeder of the headline inflation gains, fell 1.5% in August but are still up 31.9% from a year ago. Transportation services also declined 2.3% for the month.

This is breaking news. Please check back here for updates.

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