Higher gas and housing costs boosted U.S. consumer prices 0.4% in August, the most in seven months. The increase suggests inflation could be picking up, but the figures may have been distorted by Hurricane Harvey.
The Labor Department says consumer prices climbed 1.9% last month compared with a year earlier, up from an annual gain of 1.7% in August and the second straight increase. Excluding volatile energy and food costs, prices rose 0.2% in August and 1.7% from a year earlier.
The government says Harvey had a “very small effect” on its ability to gather data, but would not say whether last month’s gas price increase resulted from the storm. Harvey disrupted oil refineries on the Gulf Coast and pushed up average gas prices nationwide.
“Fed officials will be more focused on the monthly changes in core inflation, and today’s 0.2% print was enough to keep a December rate hike on the table,” notes Royce Menders of CIBC Capital Markets. “The above consensus headline and solid core prints have been positive for the dollar and negative for fixed income.”