Higher Gas Costs in August Push Consumer Price Index Higher

Higher Gas Costs in August Push Consumer Price Index HigherBy CHRISTOPHER S. RUGABER

WASHINGTON -- More expensive gas drove up consumer prices in August by the most in three years. But outside of energy costs, inflation was tame.

The Labor Department said Friday that consumer prices rose a seasonally adjusted 0.6 percent last month, the first increase since March. Higher gas prices accounted for 80 percent of the increase. Food prices rose 0.2 percent.

Excluding the volatile food and energy categories, core prices edged up 0.1 percent for the second straight month. Rents, medical care and new cars got more expensive, while clothing, furniture and airline fares fell in price.

Mild inflation leaves consumers with more money to spend, which can boost economic growth. Lower inflation will allow the Federal Reserve to stick with programs announced Thursday aimed at lifting the economy. If the Fed were worried that prices are rising too fast, it might have to raise interest rates.

In the past 12 months, prices have increased 1.7 percent. That's down from a peak of 3.9 percent in September 2011 and below the Fed's inflation target of 2 percent.

Core consumer prices rose 1.9 percent in the past 12 months, the smallest annual increase in a year.

August's prices rose largely because gas prices have jumped in recent weeks. The average price for a gallon of gas nationwide was $3.87 on Friday, up 16 cents in the past month.

The modest increase in food prices indicates the drought in the Midwest is not yet pushing up grocery prices. Some economists say that will happen in the comings months.

On Thursday, the Federal Reserve said it would purchase $40 billion of mortgage-backed securities a month until the economy and the job market steadily improve. Fed officials also said they would keep short-term interest rates low even after the economy strengthens.

Hiring has weakened recently after a strong start to the year. Employers added only 96,000 jobs in August, below the 141,000 added in July and far below the average gains of 226,000 in the first quarter.

The unemployment rate fell to 8.1 percent from 8.3 percent, but only because the number of people in the work force shrank.

For now, the economy isn't growing fast enough to spur greater job gains. The economy expanded at a 1.7 percent annual pace in the April-June quarter. That's down from 2 percent in the first quarter and 4.1 percent in the final three months of last year.

Increase your money and finance knowledge from home

Intro to Retirement

Get started early planning for your long term future.

View Course »

Timing Your Spending

How to pay less by changing when you purchase.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

When Bush left office, gas was $1.86 a gallon. In November 1999, Clinton signed the bill to deregulate the financial system. He encouraged people to give Obama a chance. Not voting for Obama.

September 18 2012 at 3:12 PM Report abuse rate up rate down Reply

Gas prices up, Obama say's drilling up. But if federal land is counted then drilling is not up.

Drill on federal lands.

Keystonr pipe line, Some lib came on a news program. says the holdup is Neb. B. S. they solved that months ago. The holdup is Obama.

Offer more drillable contracts in the gulf. That's Obama.

Drill in Alaska, That's Obama.

Get a new refinery or two approved to be built. That's Obama.

I guess we can change his name to "That's Obama"

Hey. if Obama gets elected just think of the mess he is going to inherit. Blame Obama for his mess. Won't that be a funny bill board.

September 14 2012 at 11:36 PM Report abuse rate up rate down Reply
1 reply to tgriffo418's comment
Kevin OBrien

I agree. Green energy is expensive and cheap fossil fuels would put a halt to them. You do the ARITHMETIC!

September 15 2012 at 10:02 AM Report abuse rate up rate down Reply

They just don't care, do they..................

September 14 2012 at 8:36 PM Report abuse rate up rate down Reply
1 reply to runswthscisors40's comment

the oil barons?? ha! They're making money, why should they care about you??

September 14 2012 at 8:40 PM Report abuse rate up rate down Reply

Don't panic folks, the Great Obamanator will release the strategic reserve (just in time for the November elections), and bring gas prices down.......he's our hero!!!..................

September 14 2012 at 8:35 PM Report abuse rate up rate down Reply
1 reply to runswthscisors40's comment

Don't hold your breath - best to buy a fuel efficient car and hedge your bets. 'course you can hope for a Robme administration, but that prolly won't solve the cost of gas. seems like the Chinese are using more and more of it, and if we won't pay the going rate to the oil companies, they'll get it in China and India.

September 14 2012 at 8:40 PM Report abuse rate up rate down Reply

come on folks. so much anger about one man. gas prices in none subsidized countries are in the ten dollar a gallon range. with all the blogger economists out there, with their rush limbaugh mentality, if the dollar is in such bad shape, gas should be ten to twelve dollars a gallon. obama just wants oil companies off the tax dole, is that such a bad thing? the way the world is going, we are not in that bad shape. the election will prove me right, obama in a landslide.

September 14 2012 at 8:26 PM Report abuse +2 rate up rate down Reply

There is no reason gasoline prices shoulkd be rising in the United States......except speculation. The U.S. has plenty of gasoline in reserve in the U.S. and to shown this.........Oil companies are exporting finished fuel products, like gasoline to other countries.

September 14 2012 at 7:07 PM Report abuse +1 rate up rate down Reply

Gas prices will remain high, simply because we, the consumer will continue buying even if it went to 10 dollars a gallon. What this country needs is an old time boycott, and I don't mean a mini boycott, where we don't buy gas on Tuesdays, or don't buy Shell or Mobil. I mean a real honest to goodness boycott. Everything that uses gas shuts down for 12 hours, is it possible, yes, but it will never happen because we the consumer will never have the balls or guts to pull it off. We will continue griping and complaining all the way to the pump.

September 14 2012 at 5:36 PM Report abuse -1 rate up rate down Reply
1 reply to cliffy934's comment

I agree 100% those days where Americans had a backbone are gone. Now we have a Nation of whiners.. Its sad. If people knew the actual power they had. Everything could be solved. From these crooks running washington, to the terrorist abroad.. but, when all their freedom is gone..then they will want to stand up..but sadly, it will be to late.

September 14 2012 at 6:17 PM Report abuse rate up rate down Reply

Food and Fuel is not included in core inflation, so everyone stop worrying, food and fuel can go sky high, but it will not affect core inflation. Why these 2 necessary ingredients are not included in core inflation is sure a mystery to me.

September 14 2012 at 5:31 PM Report abuse +1 rate up rate down Reply

The little guy is struggling at the pump

September 14 2012 at 4:50 PM Report abuse +1 rate up rate down Reply
Master Sixkiller

Relax inflation remains the same ROFLMAO

September 14 2012 at 3:58 PM Report abuse rate up rate down Reply