Con­sumer prices ticked up 0.2% in Aug. Price of oil helps push stocks down

Drug prices, doc­tor, hos­pi­tal charges take record jump

Baltimore Sun - - BUSINESS MARYLAND - By Martin Crut­singer

WASH­ING­TON — U.S. con­sumer prices edged up 0.2 per­cent in Au­gust as a surge in med­i­cal care off­set flat read­ings for food and en­ergy.

The re­sult fol­lows an un­changed fig­ure in July. Core in­fla­tion, which ex­cludes the volatile cat­e­gories of food and en­ergy, rose 0.3 per­cent, the La­bor Depart­ment re­ported Fri­day. It was the big­gest monthly in­crease since Fe­bru­ary.

The climb in core in­fla­tion was led by a record jump in drug prices and the big­gest rise in doc­tor and hos­pi­tal charges in a quar­ter-cen­tury.

Over the past 12 months, core in­fla­tion is up 2.3 per­cent, but over­all in­fla­tion has risen a more mod- Con­sumer prices are higher, thanks to a hike in health care, the La­bor Depart­ment says. er­ate 1.1 per­cent, still be­low the Fed­eral Re­serve’s 2 per­cent tar­get for an­nual in­creases in in­fla­tion.

The Fed meets next week and is ex­pected to keep its key in­ter­est rate un­changed at a near-record low of 0.25 per­cent to 0.5 per­cent.

The Fed raised rates by a quar­ter-point last De­cem­ber but since then, of­fi­cials have held off on fur­ther rate hikes, re­flect­ing con­cerns about slug­gish eco­nomic growth and pe­ri­odic tur­bu­lence in fi­nan­cial mar­kets.

Econ­o­mists think the Fed’s next rate hike will not come un­til De­cem­ber.

Steve Mur­phy, U.S. econ- omist at Cap­i­tal Eco­nom­ics, said the lat­est re­port on con­sumer in­fla­tion is un­likely to al­ter that view.

“Do­mes­tic price pres­sures con­tinue to build, but only very grad­u­ally,” he wrote in a re­search note.

The rise in core in­fla­tion in Au­gust was led by a record 0.9 per­cent rise in drug prices and a 0.9 per­cent jump in the cost of med­i­cal ser­vices such as doc­tor vis­its and hos­pi­tal stays.

It was the big­gest onemonth rise in this cat­e­gory since Novem­ber 1990.

Food costs were un­changed in Au­gust, with the cat­e­gory that cov­ers meat, poul­try, fish and eggs fall­ing for the 12th month in a row.

En­ergy costs were also flat in Au­gust as gaso­line dropped by 0.9 per­cent. The de­cline was off­set some­what by a rise in elec­tric­ity and nat­u­ral gas prices.

Hous­ing and rental costs were up 0.3 per­cent in Au­gust and have risen 3.4 per­cent over the past year.

NEW YORK — Stocks were mod­er­ately lower Fri­day, pushed down, in part, by the price of oil and the pos­si­bil­ity that the Fed­eral Re­serve may raise in­ter­est rates at its meet­ing next week.

Banks also fell, led by a plunge in Deutsche Bank af­ter the Ger­man lender said it did not in­tend to pay the $14 bil­lion set­tle­ment that the U.S. govern­ment asked for over the bank’s han­dling of mort­gage se­cu­ri­ties in the run-up to the 2008 fi­nan­cial cri­sis.

The Dow Jones in­dus­trial av­er­age fell 88.68 points, or 0.5 per­cent, to 18,123.80. The Stan­dard & Poor’s 500 in­dex fell 8.10 points, or 0.4 per­cent, to 2,139.16 and the Nas­daq com­pos­ite fell 5.12 points, or 0.1 per­cent, to 5,244.57.

Bench­mark U.S. crude lost 88 cents to $43.03 per bar­rel in New York.

MARK LENNIHAN/AP

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