US consumer prices increase more than expected in August

WASHINGTON, Sept 11 (Reuters): US consumer prices rose more than expected in August and the annual increase in inflation was the largest in seven months, but the data is not expected to prevent a much-anticipated interest rate cut from the Federal Reserve next week against the backdrop of labor market weakness.

The Consumer Price Index rose 0.4 per cent last month after increasing 0.2 per cent in July, the Labor Department's Bureau of Labor Statistics (BLS) said on Thursday.

In the 12 months through August, the CPI advanced 2.9 per cent, the largest increase since January, after climbing 2.7 per cent in July.

Economists polled by Reuters had forecast consumer prices would rise 0.3 per cent and increase 2.9 per cent on a year-over-year basis.

The CPI report could fan concerns of stagflation following recent downbeat news on the labor market.