Consumer prices rose 0.2 percent annually through August, the Bureau of Labor Statistics reported Wednesday, the same as through July.
Sharply falling gas prices pushed month-to-month inflation down to negative 0.1 percent from positive 0.1 percent in July, adjusted for seasonal variations. That decline was expected by economists polled by Bloomberg.
Dormant inflation over 2015 has boosted the purchasing power of consumers, who have faced lower prices at the gas pump in particular.
Gas prices fell over 4 percent in August after increasing in previous months. Over the past year, gas prices are down nearly a quarter, following a massive decline in oil prices last year that leveled off but then resumed in August.
But low inflation has also become a top concern for the Federal Reserve, which targets inflation at 2 percent.
Investors are focused on a Fed monetary policy meeting that begins Wednesday morning in Washington, at which officials will decide whether or not to raise interest rates for the first time in nine years. The Fed has said in recent months that it will act when it is “reasonably confident” that inflation is moving toward its target.
Core inflation, a less volatile measure of price changes that strips out the movements of food and energy prices, is closer than headline inflation to the Fed’s target.
Core inflation was 1.8 percent in August, unchanged from the previous month. Over the past year, it has remained in a narrow band in between 1.5 percent and 2 percent.
Fed officials will have to determine this week whether headline inflation or the lower core inflation measure best represents where prices are heading in the months ahead.
Some of the factors driving down prices, such as the more than 50 percent decline in the price of a barrel of oil from last summer, are thought to be transitory. Fed chairwoman Janet Yellen has also lower import prices from the stronger dollar into that category.
Nevertheless, there are signs that the same factors that have lowered commodity prices and driven up the dollar could also slow growth and job creation in the U.S.
One dynamic in particular to watch is slowing growth in China. Concerns about growth and demand for oil and other commodities in China has riled markets worldwide in recent weeks.
Apart from factors linked to energy prices or exchange rates, the cost of shelter has risen by over 3 percent in the past year, with rent up 3.6 percent. Shelter accounts for roughly a third of consumer prices.
Over the past year, the cost of eggs has soared over one third, as egg farmers have struggled with an outbreak of avian flu. Egg prices rose 8 percent in August alone.
