Photo: Charlie Neibergall, STF
Costs for clothing, auto insurance and health care also rose in August.
Costs for clothing, auto insurance and health care also rose in…
WASHINGTON – Higher gasoline and housing costs boosted U.S. consumer prices 0.4 percent in August, the most in seven months. The increase suggests inflation could be picking up, but the figures were likely distorted by Hurricane Harvey.
Consumer prices climbed 1.9 percent last month compared with a year earlier, the Labor Department said Thursday, up from an annual gain of 1.7 percent in August and the second straight increase. Excluding volatile energy and food costs, prices rose 0.2 percent in August and 1.7 percent from a year earlier.
The pickup will likely assuage Federal Reserve policymakers that prices are stabilizing, a sign of a healthy economy. Fed officials may be more likely to raise short-term interest rates as a result in the coming months, economists said.
“August’s strong gain should help alleviate concerns among Fed members that the slowdown in inflation that began in the spring is set to continue,” said Sarah House, an economist at Wells Fargo.
The government said Harvey had a “very small effect” on its ability to gather data. But it 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 gasoline prices nationwide, though the increase occurred at the end of the month. The government collects price data throughout the month.
Gas prices jumped 6.3 percent last month, the largest increase since January. Housing costs were the other main driver of inflation last month: Hotel prices leaped 4.4 percent, the largest gain on records dating from 1997, after falling by the most on record in July. Rents rose 0.4 percent, the most in nearly a year.
Most of the Gulf Coast refineries are now operational, which could bring gasoline prices back down in the coming weeks.
Even with last month’s increase, inflation remains below the Federal Reserve’s 2 percent target, where it has been for five years. That has complicated the Fed’s plans to lift short-term interest rates one more time this year.
On Wall Street Thursday, it was a split decision as gains in a handful of industrial and health care companies largely outweighed sluggishness elsewhere in the market, including the tech sector.
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