US consumer prices barely rose in August, but gains in rents and medical care costs pointed to a stabilisation in underlying inflation that could allow the Federal Reserve to start trimming its bond purchases.

The US Labor Department said its consumer price index edged up 0.1% last month after rising 0.2% in July.

In the 12 months to August, the increase in the CPI slowed to 1.5% after advancing 2% in July.

Economists had expected consumer prices to rise 0.2% last month and increase 1.6% from the same time last year.

Stripping out the volatile energy and food components, the so-called core CPI rose 0.1% after increasing by 0.2% in each of the past three months. Rents and medical care accounted for most of the increase in the rate.

That took the increase over the past 12 months to 1.8%, the largest rise since March. The core CPI had gained 1.7% in July.

The steady rise in the year-on-year core CPI could ease concerns among some Fed officials about a disinflationary trend becoming entrenched.

Earlier in the year core inflation was moving lower, and reached levels that made some Fed officials uncomfortable. It has been creeping up for last two months from a two-year low of 1.6% touched in June.

The inflation data was released as Fed policymakers prepared to meet today and tomorrow to deliberate on monetary policy. Economists generally expect the US Fed to announce a scaling back of the $85 billion in bonds it has been buying a month to hold interest rates down at the end of the two-day meeting.

The Fed targets 2% inflation, although it tracks a gauge that tends to run a bit below the CPI. Fed Chairman Ben Bernanke has viewed the low inflation as temporary and expects prices to push higher as the economy strengthens.

Last month, overall inflation in the US was held back by a 0.3% drop in energy as the cost of natural gas fell. Energy prices had increased 0.2% in July. Food prices nudged up 0.1%, rising by the same margin for a second month in row.

Away from food and energy, there were pockets of price pressures, with housing and medical care costs advancing.