CPI dips in August, home starts hit 12-yr low
( Reuters ) - Consumer prices unexpectedly dipped 0.1 percent last month and new home construction hit a 12-year low, data on Wednesday showed, underlining concerns about the country's economic outlook.
August consumer prices were pushed lower by slumping energy costs and posted their first decline since October, the Labor Department said, while core inflation rose as expected.
"That's good news considering the cut in the fed funds rate yesterday. It was supportive of what the Fed did yesterday," said Richard Huber, an economist at A.G. Edwards and Sons.
Inflation is under scrutiny by the Federal Reserve, which on Tuesday slashed interest rates by a half percentage point to 4.75 percent to shield the economy from the housing market slump, but also warned it was monitoring price pressures.
Stock futures added to gains on the weaker-than-forecast inflation data, while U.S. government debt prices were steady at lower levels. The dollar was also steady after the reports.
Analysts polled by Reuters had forecast the closely watched consumer price index, the government's key gauge of inflation, to be unchanged in August after a 0.1 percent gain in July.
Excluding volatile food and energy price, core inflation advanced 0.2 percent last month matching the forecast and July's rise, the Labor Department said.
But calculating core inflation's change more precisely showed its gain remained a mild 0.1503 percent.