NEW YORK (CNN/Money) - U.S. consumer prices rose slower than analysts' expectations in August, the government said Tuesday.

The Labor Department reported that the consumer price index (CPI), a broad measure of prices paid by consumers, rose 0.3 percent after rising 0.2 percent in July. Economists, on average, expected CPI to rise 0.4 percent, according to a Reuters poll.

Excluding volatile food and energy prices, the so-called "core" CPI rose 0.1 percent, after rising 0.2 percent in July. Economists expected core CPI to rise 0.2 percent, Reuters said.

On a year-over-year basis, core CPI is up just 1.3 percent, the lowest such rate since 1.2 percent in 1966.

"Outside of the volatile food and energy components, we continue to see that the risk of disinflation [not be to confused with deflation] remains very much alive," said Anthony Chan, chief economist at Banc One Investment Advisors.

U.S. stock prices rose in early trading after the report. Treasury bond prices were mixed.

The report came as policy-makers at the Federal Reserve began a meeting to discuss the state of the economy and their direction for short-term interest rates. Though the economy has shown many signs of recovery -- which in past recoveries might have encouraged the Fed to raise rates to fight inflation -- central bank policy-makers are expected to keep rates on hold.

Fed Governor Ben Bernanke and other officials have noted that the economy has a great deal of "slack" -- in the form of unemployed workers and unused production capacity -- that needs to be taken up before there's much danger of inflation. If Bernanke and others are correct in their belief that the economy can grow strongly for some time before all the "slack" is taken up, then rates could be low for a long time.

The Fed's worry is that slowing inflation -- "disinflation" -- will hurt corporate pricing power and profits, slowing the economy down and threatening the onset of "deflation," in which prices fall, with the potential for more economic damage.

Tuesday's CPI report likely did little to raise any fears of runaway inflation. Most of the gain was due to a 2.7 percent jump in energy prices, the effect of higher oil and gasoline prices.

Transportation prices rose 1.1 percent, and food prices rose 0.3 percent. Housing and apparel costs rose 0.1 percent each, and medical prices rose 0.2 percent.