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Washington - The cost of living in the US rose more than projected in August on higher shelter and health-care prices, indicating that inflation continues to move closer to the Federal Reserve’s goal.
The consumer-price index climbed 0.2% after being little changed the previous month, Labour Department figures showed Friday in Washington. The median estimate of economists surveyed by Bloomberg was for a 0.1% advance.
Excluding volatile food and fuel costs, the so-called core measure rose a bigger-than-forecast 0.3% from a month earlier.
Stabilizing energy prices, the diminishing influence of the strong dollar and nascent wage gains are helping to gradually push inflation higher. While most economists and investors expect the central bank to leave interest rates unchanged when policy makers meet next week, faster inflation would bolster the case for a hike later this year.
“Inflation pressures are building gradually,” Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida, said before the report. “There’s really not much inflation in goods. Where we’re seeing price pressures is in rents and health care. Wage pressures are building.”
Expenses for shelter climbed 0.3%. Owners-equivalent rent, one of the categories designed to track rental prices, also rose 0.3%.
Prices for medical care services, which include health insurance, doctor visits and hospitalisations, increased 0.9% in August, the most since November 1990. These readings often vary from results for this category within the Fed’s preferred measure of inflation - the core personal consumption expenditures deflator. Economists attribute the discrepancy to different methodologies.
Analyst estimates
Bloomberg survey estimates for the consumer price index ranged from no change to a gain of 0.2%.
The consumer price gauge increased 1.1% in the 12 months ended in August, after a 0.8 percent year-over-year advance the prior month.
The month-over-month gain in the core CPI measure follows a 0.1% gain in July. It increased 2.3% from August 2015, after rising 2.2% in the prior 12-month period.
The median projection in the Bloomberg survey was for the core gauge to rise 0.2% from the previous month, and to climb 2.2% from the prior year.
The Fed’s preferred gauge of inflation, which is the Commerce Department’s PCE measure, hasn’t matched the central bank’s 2% goal since April 2012. It rose 1.6% in July from a year earlier.
Energy and food costs were both little changed in August. Americans also paid roughly the same prices for new automobiles. Clothing prices increased 0.2%.
Airfares decreased 0.1%, following a 4.9% drop in July.
The CPI is the broadest of three price gauges from the Labour Department because it includes all goods and services. About 60% of the index covers prices consumers pay for services from medical visits to airline fares, movie tickets and rents.
The cost of living took more of Americans’ paychecks in August, a separate report from the Labour Department showed on Friday. Hourly earnings adjusted for inflation fell 0.% from the prior month. They were up 1.3% over the past 12 months.
