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Consumer prices up slightly in August as inflation remains low

U.S. consumer prices edged up 0.1% in August, led by increases in medical care, rents and tobacco, the Labor Department said Tuesday.

The report, confirming that inflation remains low, comes as Federal Reserve policy makers meet Tuesday and Wednesday to consider whether to start paring back the central bank's bond purchases.

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Higher inflation could nudge the Fed to pull back on its low-interest-rate policies, but if the inflation rate stays too low, policy makers might keep those policies in place to stimulate the economy.

Tuesday's report showed medical care and rents accounted for most of August's rise. Price declines were notched in utilities, household furnishings and used vehicles.

The food index also rose slightly in August, with fruits and vegetables rising 1.2%. The energy index, thanks in part to cheaper natural gas, decreased 0.3%.

In the last year, overall prices have risen 1.5%.

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