US Aug Consumer Prices +0.4%, Core CPI +0.2%

The cost of living for Americans continued to rise in August, but the increase was lower than in July and underlying inflation remained tame amid a weak economy

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        Consumer prices rose a seasonally adjusted 0.4% from July as gasoline, food and shelter costs continued to increase, the Labor Department said. In July, consumer prices were up by 0.5%. Compared to a year earlier, prices rose by 3.8% in August.

        Underlying inflation, which excludes volatile energy and food costs and is considered a better predictor of price trends by the Federal Reserve, rose by a more moderate 0.2% in August. Economists surveyed by Dow Jones Newswires had forecast a 0.2% rise for both underlying inflation and overall prices.

        The mixed inflation report comes amid increasing signs of weakness in the U.S. economy. Given the feeble jobs market and tame underlying inflation, Fed officials are likely to be less concerned about the inflationary effects of easing credit to spur growth and jobs. The central bank will debate new action at its next policy meeting September 20-21.

        Thursday's report showed that energy prices rose by 1.2% August, less than half the 2.8% increase registered in July. Gasoline costs rose 1.9% last month, following a 4.7% jump in July. Food prices were up 0.5% in August, a similar increase to the one seen the previous month.

        Shelter prices, which include rent and have a large weighting in the consumer-price index, rose 0.2% in August following a 0.3% increase the previous month.

        The Fed believes inflation will continue to slow as lower prices for oil and other commodities work their way through a feeble economy. Weak consumer spending -- retail sales were flat in August -- and high unemployment make it harder for companies to raise prices and workers to demand higher pay, keeping inflation at bay. A separate report Thursday showed the number of people making claims for unemployment benefits last week rose to the highest level since the end of June.

        Without rounding, the CPI report showed consumer prices rose by 0.374% in August from July. Excluding food and energy items, consumer prices rose by 0.224% without rounding.

        Meanwhile, real average weekly earnings fell 0.8% in August, showing that wage pressures remain subdued and pose little threat to inflation. Since peaking in October 2010, wages adjusted for inflation have fallen by 2.2%.