NEW YORK (CNN/Money) -
Consumer prices edged higher in the United States in August, the government said Wednesday, another sign that inflation remains a distant threat in an economy struggling to emerge from recession.
The Labor Department said its consumer price index, which measures retail prices paid by consumers, rose 0.3 percent after rising 0.1 percent in July. Excluding food and energy prices, "core" CPI also rose 0.3 percent after rising 0.2 percent in July. Economists expected a 0.2 percent rise in both the CPI and core CPI, according to Briefing.com.
"There really is no inflation problem right now, and there's certainly nothing in the pipeline, with the economy as weak as it is," Bill Cheney, chief economist at John Hancock Financial Services, told CNNfn's CNNmoney Morning program.
In a separate report, the Commerce Department said the trade gap, which measures the difference between imported and exported goods and services, fell to $34.5 billion in July from $37.16 billion in June. Economists, on average, expected the trade gap to shrink to $37 billion, according to Briefing.com.
The reports had little impact on U.S. stock prices, which fell in early trading. Treasury bond prices were mostly higher.
Apparel prices helped drive overall consumer prices higher in August, rising 1.1 percent, the first gain after four months of declines.
Energy prices rose 0.6 percent, the biggest gain since 4.5 percent in April. Food prices fell 0.1 percent.
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Higher consumer prices weigh on consumer spending, which fuels about two-thirds of the U.S. economy. But prices have been in check for several months, particularly during a recession that began in March 2001.
To fight that downturn, the Federal Reserve cut its target for short-term interest rates 11 times in 2001. It has left rates alone so far in 2002, and most economists think it will continue to do so at its next policy meeting, scheduled for Sept. 24.
The Fed cuts rates to lower the cost of borrowing and fuel growth. It raises rates to slow the economy down and fight inflation. Even with its key short-term interest rate at a 40-year low, recent economic data have been mixed at best, encouraging the Fed to keep rates low.
In recent days, for example, reports of strong retail sales have contrasted with reports of weakness in manufacturing, and Fed Chairman Alan Greenspan has said the Fed might need to trim its outlook for economic growth this year.
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