Washington - The Labor Department said that its Consumer Price Index rose a seasonally adjusted 0.2% in August, the same as in July.
Despite labor shortages that have begun to drive up wages -- which can prompt price increases from companies seeking to maintain their profits -- inflation has remained contained. It's running at a 1.6% annual rate this year, compared to 1.7% for all of last year.
That's partly because hard times in other countries have dampened world demand for many products, lowering prices on commodities from gasoline to coffee.
Some economists believe the lack of inflation worries could make it easier for Federal Reserve policy-makers, who next meet on Sept. 29, to decide to lower interest rates. Lower U.S. rates could help ease the international financial troubles, which started in Asia and have plunged a third of the world's economies into recession.
But Federal Reserve Chairman Alan Greenspan, in congressional testimony , played down that possibility.
Food prices rose 0.2% in August, largely because of a 1.6% increase in dairy prices. Butter prices increased 5.3%. Poultry prices were up 1.5% and egg prices 1.0% because of recent drought and heat waves.
The effect of those increases, however, was softened by a drop in fresh produce costs -- 1.0% for vegetables and 0.5% for fruit. Meat prices fell 0.3%. And coffee prices, which fell 0.9% in August, are running 11% below last year.
Excluding food and energy prices -- which many economists believe are too volatile to be a good measure of inflation -- consumer prices increased 0.2% in August. For the year to date, these "core" prices are rising at a 2.5% annual rate, compared to 2.2% last year.
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