Economy

U.S. consumer prices accelerate in August

U.S. consumer prices accelerate in August”

US stock index futures were little changed on Thursday ahead of key inflation data that could impact the Federal Reserve's decision on the timing of another interest rate hike this year.

Less the volatile food and energy sectors, the index rose 0.2 percent in August.

The government said Harvey had a "very small effect" on its ability to gather data.

The data covers the period during which Hurricane Harvey inundated Houston and disrupted oil refineries on the Gulf Coast, pushing up average gas prices nationwide. Still, the momentum in the core prices has rebounded considerably in the past few months.

While Federal Reserve officials are likely to treat the gasoline-driven rise in the CPI as temporary, they could take comfort in the almost broad gains in the monthly core CPI.

That followed four straight monthly increases of 0.1 percent. 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. A core CPI inflation rate at 1.7 percent is in line with a core PCE inflation rate, the Fed's preferred measure, at an unchanged rate of 1.5 percent in August, well below the 2 percent target.

U.S. Treasury yields were mixed on Thursday as investors tried to figure out the impact of the consumer inflation report on future Fed interest rate decisions.

Most troublesome for the Fed was that consumer price inflation slowed this year through June. The core PCE rose 1.4 percent in July, the smallest year-on-year increase since December 2015. Fed chair Janet Yellen attributed the drop to temporary factors, including sharp falls in the price of mobile phone services.

The Bank of England signaled Thursday that officials are preparing to raise interest rates within months to restrain accelerating inflation, a fresh sign that a decade-long era of ultraloose central-bank policy is slowly drawing to a close.

Rising fuel and shelter costs drove up United States consumer prices in August, a sign inflation could be gaining pace after remaining stubbornly sluggish for months, according to government data released on Thursday.

On a 12-month basis, the index rose 1.9 per cent over the same month in 2016, up from 1.7 per cent last month.



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