WASHINGTON (AP) – Higher gas 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 policy makers 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 gas prices nationwide, though the increase occurred at the end of the month. The government collects price data throughout the month.