A man fills his gas tank at a station in Lyndhurst, Ohio. Gas prices helped… (Tony Dejak / Associated…)
WASHINGTON -- The gas pump helped the economy last month and also hurt it.
Retail sales jumped 0.9% in August, the biggest increase in six months, driven by a rise in gasoline prices, the Census Bureau said Friday.
But the spike in fuel costs also caused the cost of living to go up 0.6% last month -- the largest move since June 2009, according to the Labor Department.
Gas stations saw their sales rise 2.5% because of higher gasoline prices, which boosted retail sales. Auto sales also helped, rising 12.3% from July. Combined, the gas and auto sales more than offset a 2.3% drop in the purchase of electronics and appliances.
Electronics sales should get a boost this month as the new iPhone 5 goes on sale starting Friday.
The rise in gas prices was a major factor in the improved August retail sales, said Steven Ricchiuto, chief economist at Mizuho Securities. The overall 0.9% monthly increase would have been just 0.3% without gas station sales, he said.
Likewise, the gas prices bumped up the August consumer price index. About 80% of the increase was due to a rise in the gasoline index, the Labor Department said.
Inflation had been flat in July. But even with the recent increase in gas prices, inflation over the previous 12 months was 1.7%, below the Federal Reserve's target of 2%.
The so-called core inflation rate, which excludes volatile energy and food prices, was up just 0.1% in August and 1.9% for the previous year.
"These data points highlight the fact that the spike in gasoline is a bigger growth concern than an inflation driver," Ricchiuto said.
Inflation concerns are up after the Federal Reserve on Thursday announced a new round of bond-buying to stimulate the economy. Some analysts worry about the impact on consumer prices of the central bank's plan to pump more money into the economy by purchasing $40 billion mortgage-backed securities every month until unemployment improves substantially.
US Retail Gas Price data by YCharts
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