Consumer prices in the U.S. showed a modest increase in the month of August, according to a report released by the Labor Department on Tuesday. The Labor Department said its consumer price index inched up by 0.1 percent in August following a 0.2 percent increase in July. The modest increase in consumer prices reflected a 0.2 percent increase in prices for shelter as well as a 0.7 percent increase in prices for medical care. Meanwhile, the report said energy prices dipped by 0.3 percent in August following a 0.2 percent increase in the previous month. A 2.3 percent drop in prices for natural gas contributed to the decrease in energy prices along with declines by the gasoline and electricity indexes. Food prices edged up by 0.1 percent for the second straight month amid a 1.2 percent jump in prices for fruits and vegetables. The core consumer price index, which excludes food and energy prices, also edged up by 0.1 percent in August after rising by 0.2 percent in July. The Labor Department said the indexes for personal care, tobacco, and apparel rose, while the indexes for airline fares, household furnishings and operations, and used cars and trucks declined. Compared to the same month a year ago, consumer prices were up by 1.5 percent in August, reflecting a slowdown from the 2.0 percent annual growth seen in July. Meanwhile, core consumer prices increased at an annual rate of 1.8 percent in August, a slight uptick from the 1.7 percent growth seen in the previous month. "Bottom line, the benign inflation figures may be part of the FOMC statement in that they give a downside range with what they are comfortable with," said Peter Boockvar, chief market analyst at the Lindsey Group. "We know the upside is 2.5%." He added, "With income growth very lackluster, we have to wonder why the Fed wants any inflation at all but it seems embedded in their DNA to have 2% y/o/y inflation which also means your $1 will buy 2% less each year." Last Friday, the Labor Department released a report showing that producer prices rose by more than expected in the month of August. The Labor Department said its producer price index rose by 0.3 percent in August after coming in unchanged in July. The index had been expected to edge up by 0.2 percent. Meanwhile, the core producer price index, which excludes food and energy prices, came in unchanged in August after inching up by 0.1 percent in the previous month.