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By Lucia Mutikani
WASHINGTON, Sept 11 (Reuters) - U.S. consumer prices accelerated in August, while a key measure of underlying inflation posted its largest increase in four months, reinforcing expectations that the Federal Reserve will raise interest rates next week.
The Labor Department's Consumer Price Index report on Friday followed strong readings in several components of the Producer Price Index released on Thursday that feed into the Personal Consumption Expenditures price indexes, the inflation measures the U.S. central bank tracks for its 2% target. Soon after the CPI data was published, financial markets priced in a roughly 91% chance of a rate hike next week, up from about 72% on Thursday, CME's FedWatch tool showed.
"It wasn't as hot as yesterday's PPI, but today's CPI left the Fed with less room to maneuver as it tries to maintain its inflation-fighting credentials," said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
