U.S. consumer prices index up in August due to energy prices

U.S. consumer prices index was up 0.4% from July, the Labor Department said Wednesday. The rising gasoline prices by 9.1% pushed overall consumer prices higher in August even as prices for most other goods and services remained in check. Energy prices rose 4.6 percent last month even though they were nearly one-fourth lower than the same period a year ago, when oil prices began to tumble from their record highs of around $145 a barrel.

Core CPI, which excludes food and energy prices, increased 0.1%, suggesting that most costs of living were not following the upward arc of oil and gasoline prices.

Many on Wall Street have warned that the government's immense stimulus measures will eventually lead to inflation, pushing commodity prices sharply higher and further eroding the value of the dollar. These inflation hawks have helped push the price of gold above $1,000 recently, and they point to rising oil and commodities prices as a harbinger.

The Fed officials have insisted that the economic recovery will be too slow to spark a rise in prices. The data is unlikely to change expectations that the Federal Reserve will remain on hold into next year given that core prices remain soft. Unemployment is still high, consumer demand for credit and goods and services is still subdued, and there is enormous slack in the economy.

Investors were happy with the news, as the stocks saw strong gains at the closing bell.