Washington, DC, United States (4E) – Consumer prices in the U.S. increased at a modest pace in August, a sign that inflation continues to be soft, which will likely weigh on Federal Reserve policymakers as they decide this week whether to rein in their bond-buying program.
The consumer-price index grew 0.1 percent, the slowest pace in three months, after gaining 0.2 percent in July, according to Labor Department data released Tuesday in Washington. The core index, which excludes food and fuel prices, also advanced 0.1 percent. In a separate official report Tuesday, homebuilder confidence in September stayed at the highest level since 2005.
Inflation remains below the 2 percent target of the Fed, and has hovered at low levels. That means policy makers could worry less about potential risks to the economy.
Overall prices in August rose 1.5 percent from the same period last year, lower than the 2 percent in July but higher than the recent low of 1.1 percent registered in April. In August, core prices advanced 1.8 percent, an increase of one-tenth of a percentage point from July and the highest level since March.
Fed officials began their two-day policy meeting on Tuesday, where they are set to discuss whether to scale back their $85bn-a-month bond-buying program, which aimed to lower long-term interest rates and boost demand, employment and investment. Fed Chairman Ben Bernanke has said the program could be trimmed down if the economic recovery gains momentum.