U.S. consumer prices rose less than expected in August as increases in gasoline and rents were offset by declines in healthcare and apparel costs, and underlying inflation pressures also appeared to be slowing.

Despite the moderate consumer price increases last month, inflation remains underpinned by a tightening labor market and robust economic growth. Labor market strength was reinforced by other data on Thursday showing the number of Americans filing for unemployment aid dropped last week to near a 49-year low.

“With labor market conditions tight, wage growth accelerating and input prices being pushed up by capacity constraints and recently imposed tariffs, there is plenty of upward pressure on prices,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

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