WASHINGTON (REUTERS) - US consumer prices barely rose last month as the cost of energy fell, but an increase in rents and medical care costs pointed to a stabilisation in underlying inflation that could allow the Federal Reserve to start trimming its bond purchases.
The Labour Department said on Tuesday its consumer price index (CPI) edged up 0.1 per cent last month after rising 0.2 per cent in July. In the 12 months through August, the increase in the CPI slowed to 1.5 per cent after advancing 2 per cent in July.
Economists polled by Reuters had expected consumer prices to rise 0.2 per cent last month and increase 1.6 per cent from a year-ago.
Stripping out the volatile energy and food components, the so-called core CPI rose 0.1 per cent after increasing by 0.2 per cent in each of the past three months. Rents and medical care accounted for most of the increase in the core CPI. That took the increase over the past 12 months to 1.8 per cent, the largest increase since March. The core CPI had gained 1.7 per cent in July.
The steady rise in the year-on-year core CPI could ease concerns among some Fed officials about the disinflationary trend becoming entrenched. The inflation data was released as policymakers prepared to meet on Tuesday and Wednesday to deliberate on monetary policy.
Economists generally expect the US central bank to announce a scaling back of the US$85 billion (S$107 billion) in bonds it has been buying a month to hold interest rate down at the end of the two-day meeting.