US consumer prices ease on cheaper energy

WASHINGTON, Sept 16 (Reuters) – U.S. consumer prices posted their first monthly drop in nearly two years during August as a weakening global economy cut energy costs and relieved some inflation pressures, government data showed on Tuesday.

The Labor Department’s consumer price index, the most widely used gauge of inflation, eased 0.1 percent last month after jumping 0.8 percent in July. However, core prices, which exclude volatile food and energy items, were up 0.2 percent in August following a 0.3 percent July gain.

Though analysts speculated the data would make it easier for the Fed to cut interest rates, policy-setting members of its Federal Open Market Committee announced this afternoon they were holding the benchmark federal funds rate at 2 percent.

The news on consumer prices was a bright spot in a turbulent day as policy-makers struggled to contain a growing crisis in financial markets, focused for most of Tuesday on troubled insurance giant American International Group (AIG.N: Quote, Profile, Research, Stock Buzz).

Reuters