Medical Costs Surge, But CPI Remains Tame in August

September 18, 2001 ( Consumer prices rose by just 0.1% in August, but medical costs continued to surge, according to the Labor Department.

The cost of medical care rose 0.5% during the month. Prescription drug prices were up 0.4%, doctors’ service costs were 0.7% higher and the cost of hospital services soared 1% – the largest increase since the beginning of the year.

The higher medical costs were offset by lower prices for gasoline, tobacco and airline fares, according to the government. The “core” consumer price index (CPI) rose for the second month in a row, rising 0.2%. Both that reading and the 0.1% increase in the CPI were in line with expectations.

Year-to-date, consumer prices rose at a seasonally adjusted annual rate of 2.5%, compared with an increase of 3.4% for all of 2000. The core rate of inflation so far this year has increased at a rate of 2.9%. Last year the core inflation rate was up 2.6%.