MNI DATA REACT: US Aug CPI +0.4% MOM; Core +0.4% on Used Cars

Consumer prices rose by a stronger-than-expected 0.4% in August as energy prices rose again and food prices partially recovered from a weak July, according to figures released Friday by the Bureau of Labor Statistics.

U.S. CPI rose above market expectations for a 0.3% gain in August, but still slowed from July's 0.6% increase. From a year earlier, CPI was up 1.3% from a 1.0% year-over-year increase in July.

Energy prices, accounting for 6% of the total CPI basket, grew 0.9% in August after a stronger 2.5% gain in July, with the cost of gasoline up 2.0%.

Food prices began to recover in August after falling for the first time in more than a year in July, the BLS said. Grocery items were up 0.1% in August after a sharp 1.1% decline in July, while the cost of dining out was up 0.3%.

USED CAR SURGE

Excluding food and energy prices, CPI was up 0.4% in August when financial markets had expected a monthly increase of 0.2%. From a year earlier, core CPI was up 1.7%.

A sharp increase in used vehicle prices, which rose 5.4%, accounted for more than 40% of the increase in core CPI, the BLS said.

The cost of rent rose again in August, with the owner's equivalent rent category, accounting for a quarter of the CPI basket, up 0.1% in August following a 0.2% gain in July.

Transportation services prices were flat in August after rising sharply by 3.6% in August, though airline fares were still up 1.2%.

The medical care commodities index was one of the few indexes to fall in August, down 0.1% after a flat reading in July.