US consumer inflation accelerates in August on shelter and food costs

US consumer prices rose more than expected in August, according to the Bureau of Labor Statistics' closely watched consumer price index, driven by higher shelter, food and energy costs.

Source: Sharecast

Headline CPI rose 0.4% month-on-month, up from 0.2% in July, pushing the annual rate up to 2.9% from 2.7%, with shelter costs being the largest contributor to the monthly increase, rising 0.4%, while food prices climbed 0.5%, led by a 0.6% rise in grocery items and a 0.3% uptick in dining out. Energy prices rose 0.7%, with gasoline up 1.9% over the month.

Core CPI, which strips out volatile food and energy prices, rose 0.3% for the second consecutive month, lifting the annual rate to 3.1%. Notable increases were seen in airline fares, used vehicles, apparel and new cars, while medical care, recreation and communication posted declines.

Today's CPI reading comes just 24 hours after August's producer price index revealed an unexpected decline of 0.1%. On an annualised basis, PPI rose 2.6%.

It also adds pressure to the Federal Reserve ahead of next week's two-day policy meeting, where markets have already priced in a potential 25 basis point rate cut.

Reporting by Iain Gilbert at Sharecast.com

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