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Prices show little gain
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September 18, 2001: 10:29 a.m. ET
Consumer price index up only 0.1% in August, aided by falling gas prices
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NEW YORK (CNNfn) - Prices paid by consumers rose more slowly than analysts expected in August, climbing 0.1 percent from July.
Analysts surveyed by Briefing.com had forecast a 0.2 percent gain in the Consumer Price Index, compared with a 0.3 percent drop it showed in July. The Labor Department report showed a 1.9 percent decline in energy prices, led by a 2.4 percent drop in the price of gasoline, limiting the increase.
The "core" consumer price index, which measures consumer prices excluding the volatile energy and food sectors, showed a 0.2 percent gain, in line with the Briefing.com forecast of a 0.2 percent gain. The core CPI also rose 0.2 percent in July.
In addition to lower fuel costs for consumers, the index showed lower prices for transportation and apparel. A 0.5 percent rise in medical care costs was the steepest increase.
The report confirms the lack of inflationary pressure in the U.S. economy which, coupled with concern about the weakness in the economy, especially in light of last week's terrorist attacks, has prompted the Federal Reserve to make a series of eight cuts in short-term interest rates, including a the most recent cut on Monday.
"Inflation is sufficiently low and tame -- and the economic outlook is sufficiently uncertain -- to be of little concern to the Fed at present," said Steven Wood, economist with FinancialOxygen.
Click here for CNNfn.com's economic calendar
Of more concern are data such as Tuesday's reports by Bank of Tokyo-Mitsubishi Ltd., UBS Warburg and Instinet on retail sales. Their reports showed sales dropped as expected in the days following the disasters, but showed signs of recovery by the weekend.
Economists have worried that consumer sentiment would sour after the attacks, leading people to stop spending and pulling the supports out from under the ailing U.S. economy. Many expect the Fed to cut rates again at or before its next policy meeting, scheduled for Oct. 2.
The focus on other aspects of the economy has mitigated the impact of the CPI report, and bond markets in Chicago showed little reaction to the 8:30 a.m. ET report, trading sharply lower.
U.S. stocks were encouragingly mixed on their second day of trading after the tragedy, moving in and out of positive territory. On Monday, their first day back after a four-day hiatus, both the Dow Jones industrial average and the Nasdaq composite index fell about 7 percent in brisk but orderly trading. 
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Department of Labor
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