Fuel helps boost con­sumer prices

Houston Chronicle - - MARKET SUMMARY - By Christo­pher Rugaber

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.

As­so­ci­ated Press file

Costs for cloth­ing, auto in­surance and health care also rose in Au­gust.

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