Excluding volatile food and fuel costs, the so-called core CPI - viewed by policy makers as a more reliable gauge of price trends - also increased 0.4% from the prior month after a 0.6% jump in July that was the largest in nearly three decades.
Meanwhile, as the US Labour Department had reported an unprecedented rise in used auto prices which in effect had led to a decent gain in consumer prices index last month, analysts were anticipating further rises over the coming months in light of a deepening supply crunch.
According to the report, the inflation rate August rose by 0.13% compared to July 2020. That marked the third straight month of gains for consumer prices. High unemployment is also keeping a lid on price pressures despite the Fed's extraordinarily easy monetary policy and record fiscal stimulus from the government. On a non-seasonally adjusted basis, the overall consumer-price index rose 1.3% in August from a year earlier and core prices increased 1.7% over the year. Used auto sales are booming so much they pushed up consumer price inflation last month.
Still, stirring inflation is unlikely to discourage the Federal Reserve from pumping more money into the economy to aid the recovery from the COVID-19 recession amid considerable labor market slack.
United States stocks rose on Friday, after a pullback in the previous session. In the early months of the pandemic, prices for things such as airfare and hotels collapsed as Americans stayed home. Notably, prices for food at home fell slightly by 0.1% over the month, the second consecutive decline.
U.S. crude inventories rose 2 million barrels, compared with forecasts for a 1.3 million-barrel decrease in a Reuters poll.
Prices for household furnishings and operations rose 0.9%, the largest increase since February 1991, with the costs of furniture and bedding advancing 1.6% and appliances rising 2.0%.
The cost of motor vehicle insurance rose 0.5% and prices of airline fares increased 1.2%. New vehicle prices were unchanged.
However, education fell 0.3 per cent, which the Labour Department said was its first decline since the index started in 1993, while personal care fell by the same amount after rising in June and July. Many schools and universities have shifted to online classes because of the pandemic.