* Consumer prices up 0.6 pct, largest gain since June 2009
* Gasoline price jump pushes up service station receipts
* Outside gas and autos, most retail sales weak in August
* Industrial output production declines in August
* Consumer confidence rises in early September
By Lucia Mutikani
WASHINGTON, Sept 14 (Reuters) – A jump in the cost of
gasoline pushed U.S. consumer prices up in August at the fastest
pace in more than three years, squeezing spending on other items
and threatening to slow economic growth.
At the same time, production at the nation’s factories,
mines and utilities dropped by 1.2 percent, the biggest decline
since March 2009, other data on Friday showed.
The sour mix of numbers was tempered by an unexpected
increase in consumer sentiment in early September and signs
underlying inflation pressures remained contained.
“There is a real risk that the rising cost of food and fuel
may well put additional pressure on household spending power,”
said Chris Williamson, chief economist at Markit.
The Consumer Price Index increased 0.6 percent last month,
the first increase in five months and the biggest gain since
June 2009, the Labor Department said.
Gasoline prices, which also recorded their largest increase
since June 2009, accounted for about 80 percent of the rise in
consumer inflation last month.
With gasoline costs on the rise, service station chalked up
healthy receipts.
The Commerce Department said sales at gasoline stations shot
up 5.5 percent, helping fuel a 0.9 percent rise in overall
retail sales. It was the biggest gain in retail sales since
February.
Sales of automobiles and building and garden equipment were
also stronger, but elsewhere sales were weak. A gauge that
tracks the consumer spending component of the government’s GDP
measure actually fell 0.1 percent.
“Consumers are not in an expansive mood. Weakening
consumption is probable in the months ahead,” said Joseph
Trevisani, chief market strategist at Worldwide Markets in
Woodcliff Lake in New Jersey.
BROAD PRICE PRESSURES CONTAINED
The data suggested third-quarter economic growth would be
insufficient to cut into high unemployment, which on Thursday
prompted the Federal Reserve to launch a third round of bond
purchases and push its pledge to hold interest rates near zero
through at least mid-2015 from late 2014.
While the CPI rose sharply, the so-called core index, which
strips out volatile and food and energy costs, edged up just 0.1
percent, suggesting inflation will subside once gasoline costs
settle down.
In the 12 months to August overall consumer prices increased
1.7 percent, staying below the Fed’s 2 percent target, but
advancing from July’s 1.4 percent rise.
“The retail sales and consumer price reports give the
Federal Reserve very little reason to doubt their decision
yesterday to increase monetary stimulus,” said Kathy Lien,
managing director of FX at BK Asset Management in New York.
Gasoline prices at the pump rose 28 cents per gallon in
August. Automobile sales increased 1.3 percent, the most since
February, after gaining 0.1 percent in July.
Other data showed business inventories rose 0.8 percent in
July, largely due to car dealers’ boosting auto stocks.
Excluding gasoline and autos, retail sales edged up 0.1
percent after rising 0.8 percent the prior month.
Away from gasoline and autos, sales were mixed, with
receipts at building materials and garden equipment suppliers
rising 1.0 percent after increasing 1.2 percent in July. There
were gains in furniture sales and sales at restaurants and bars
But there were declines in sales at clothing stores and at
electronics and appliances shops. Receipts at sporting goods,
hobby, book and music stores were flat.
