Fuel costs push US prices higher

Petrol prices have risen recently

US consumer prices rose in August from July - as petrol prices spiked - but analysts said the risks of inflation in the economy remained low.

The Consumer Price Index rose 0.4% last month having been flat in July.

Meanwhile, separate data showed that the US current account, the broadest measure of foreign trade, shrank to its smallest deficit since the end of 2001.

It reached $98.8bn in the three months to June as US businesses and consumers bought fewer foreign-made goods.

US companies also saw export sales rises - good news for manufacturers who have suffered from both weaker domestic sales and falling exports, as recession hit consumers at home and abroad.

The deficit was down by 5.4% from the $104.5bn in the first three months of the year.

No rate pressure

Petrol prices rose by 9% in August, having fallen 0.8% in July. But when energy and food prices were stripped out, the core measure of consumer inflation rose 0.1%.

Because this figure is so low, the Federal Reserve faces little pressure to raise its benchmark interest rate - a measure it takes to fend off high inflation.

The Fed has dramatically reduced the key interest rate to a record low of nearly zero in an effort to revive the economy.

Separate figures released on Wednesday showed that US industrial production rose 0.8% in August - a second consecutive month of gains after July's revised 1% growth, which had been largely driven by carmakers.

On a sector-by-sector basis, manufacturing output rose 0.6% last month, while mining production rose 0.5%. The utilities industry saw output rise 1.9%, after a 1.6% fall in July.