Food prices increased 0.2% for the month, the same increase as July.
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The Consumer Price Index (CPI) rate of inflation fell from 0.1 per cent in July after having hovered around zero since February.
The data was in line with market expectations and analysts still expect the Bank of England to start raising its main interest rate from a record low level in the coming months.
But most MPC members think wage pressures are too weak for prices to rise rapidly, especially as economic productivity is finally starting to rise, taking the edge off the inflation impact.
Financial markets in the USA were pricing a probability of 29% of an interest rate hike on Thursday. The cost of a regular gallon of gas fell about 8% last month. Over the past 12 months, overall prices are up just 0.2 percent, while core inflation is up a modest 1.8 percent.
This sort of increase “would normally worry policymakers into a pre-emptive hike in interest rates to avoid upward wage pressures feeding through into higher inflation”, said Williamson.
In August, the food and motor fuels groups in total reduced the CPI 12-month rate by approximately 0.7 percentage points. Used cars and truck prices dropped -0.4% and are down -1.5% for the year.
Experts said the long period of “noflation”, where inflation has been either low or zero, has left the average earner more than £500 a year better off.
Economists were evenly split on a Fed move.
The consumer-price index, measuring what Americans pay for everything from groceries to medication, declined 0.1% from July, the Labor Department said on September 16. Medical care costs were stagnant. In July, the Core PCE Index, the Fed’s preferred gauge for long-term inflation, stood at 1.2%.
BoE forecasts last month pointed to inflation returning to and then exceeding its 2 per cent target in a couple of years. M eanwhile, a drop in the price of petrol has also pushed the CPI lower.
Chief economist David Kerr said, “Low inflation supports living standards by boosting disposable income and will help to sustain the economic recovery”.
“While the timing of the summer sales past year are still affecting headline inflation, another major contributor to the decline was “fuels and lubricants”, she said.
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However, other significant downward influences came from a smaller rise in clothing and footwear prices last month than a year earlier, and from books and cultural services.
