U.S. consumer prices increased 0.4% in August, matching expectations, while core CPI (consumer inflation excluding food and energy) rose 0.3%, its largest monthly increase in four months and above forecasts for a second consecutive month. The report, together with strong Producer Price Index readings, led financial markets to raise the probability of a Federal Reserve (U.S. central bank) quarter-point rate increase next week to 87%, from 72% on Thursday, after briefly reaching 91%. The Fed’s benchmark overnight rate is currently 3.50%-3.75%. Gasoline, diesel, airline fares and mobile-phone costs contributed to inflation, while food prices rose only 0.1%. Inflation-adjusted average hourly earnings fell 0.3% year-on-year, and the University of Michigan’s Consumer Sentiment Index fell to 47.8 in early September from 51.7 in August. Economists also expected August core PCE inflation, the Fed’s preferred underlying price gauge, to rise 0.3% month-on-month and 3.4% year-on-year.