Consumer prices rose a moderate 0.3 percent in August as falling clothing prices helped offset big increases in food and energy.
The Labor Department’s Tuesday report calmed investors.
Private economists said the modest advance in the consumer price index, identical to the July and June increases, showed that inflation was remaining subdued at the retail level.
However, in the Chicago area prices shot up an unexpected 1 percent last month, led by higher costs for apparel and upkeep. Also contributing to the local increase were substantial rises in costs of transportation, housing, food and beverages, the Labor Department said.
Analysts said that the national moderate rise in prices should take pressure off the Federal Reserve to boost interest rates again soon to curb inflation, economists said.
“The Fed may be comfortable in holding interest rates steady for a while,” said William Sullivan of Dean Witter.
Consumers again paid a lot more for coffee. At the same time, gasoline prices posted their largest rise in nearly a year and prices for fresh fruits and airline tickets also rose. But clothing prices fell nationally at the fastest rate in five years.
Consumer prices rose at a 2.9 percent annual rate during the first eight months of 1994, slightly more than the 2.7 percent increase in all of 1993. Some economists expect the CPI will ease in September before rising again in October.
After stripping out volatile food and energy prices, the “core” CPI rose 0.3 percent after rising 0.2 percent in July. The core rate has risen at a 2.9 percent annual rate so far in 1994. It rose 3.2 percent during all of 1993.
The consumer price report came after the government said Friday that wholesale prices jumped 0.6 percent last month, the biggest gain in nearly four years.
Economists expect the Fed-which has jacked up short-term interest rates five times since early February-will have to raise rates again before the end of the year to slow the economy to a less-inflationary pace.
But many doubt the Fed will act until after the congressional elections in early November.
