INSTANT VIEW: U.S. consumer prices rose in August

NEW YORK (Reuters) - U.S. consumer prices rose faster than expected in August from July on a spike in gasoline costs, government data showed on Wednesday, but the underlying trend pointed to muted inflation pressures.

KEY POINTS: * The Labor Department said its Consumer Price Index rose 0.4 percent last month after having been flat in July, a touch above market expectations for a 0.3 percent gain. * Gasoline prices surged 9.1 percent after falling 0.8 percent in July. Compared to the same period last year, consumer prices declined 1.5 percent. Prices have been falling on an annual basis since March this year. * Stripping out volatile energy and food prices, the closely watched core measure of consumer inflation rose 0.1 percent in August after rising 0.1 percent in July.

COMMENTS:

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK, NEW YORK:

"Headline August CPI rose 0.4 percent, which is 0.1 percent more than the estimates. But year-on-year fell 1.5 percent which is 0.2 percent higher than expected. The month-on-month 9.1 percent gain in gasoline prices was the main contributor... Statistically, disinflation remains but we are getting closer to cycling through the sharp drops in commodity prices and the headline figure should go positive soon with the degree being the question."

JAMES CARON, HEAD OF GLOBAL RATES RESEARCH, MORGAN STANLEY, NEW

YORK:

"It's a little more surprising on the upside because some people had expected the numbers to be a bit lower because of the "cash for clunkers" program. Nevertheless the yields are down right now after we got through this week's inflation data.

"The market is taking it stride and you have excess cash driving it around. Bonds are stuck in around here a little while. The data are not telling anything new."

DAVID RESLER, CHIEF ECONOMIST, NOMURA SECURITIES INTERNATIONAL,

NEW YORK:

"There was not too much surprise in CPI. The headline was right in line with our guess and the core rate was also right in line with our expectations. We are seeing continued softness on prices and I think that is going to be a feature of the economy for some time. The core rate is probably the lowest in four or five years."

STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO IN GREENWICH,

CONNECTICUT:

"The broad-based data is a tad higher and the core number is in line with expectations. We're in the part of the economic cycle where inflation is not an imminent concern, not to say there won't be long-term issues with the Fed's balance sheet. But I don't think the data will be looked at too closely today and I don't think it's going to move the markets."

MARKET REACTION: STOCKS: U.S. stock index futures hold gains BONDS: U.S. Treasury debt prices trim gains DOLLAR: U.S. dollar pares losses versus yen