US consumer prices jumped 0.5 per cent last month, driven by higher petrol prices, but underlying inflation was tame, according to data released ahead of next week's Federal Reserve meeting.

The core consumer price index - which excludes volatile food and energy components - rose by 0.1 per cent, the US Labor Department reported. That was below the consensus forecast of 0.2 per cent, held down in part by car manufacturers' discounts.

The data was largely unaffected by Hurricane Katrina, which devastated New Orleans and the Mississippi coast late last month.

Separately, new jobless claims jumped 71,000 to 398,000 last week, the biggest increase in weekly claims in almost 10 years. Some 68,000 of the new claims came from people affected by Katrina. Otherwise there were no signs of a weaker labour market.

The Federal Reserve is expected to raise its target for the federal funds rate another quarter-point, to 3.75 per cent, next week. Policymakers focus on the national economy, and past experience has shown that hurricanes tend to have little impact over time, with the dip in activity compensated by reconstruction.

The greater concern is over energy prices. Higher energy prices - particularly petrol prices - could sap consumer confidence and spending. They could also feed into a rise in core inflation, as companies try to pass on cost increases, workers demand higher wages, and inflation expectations rise.

The Fed's job will be made harder judging the incoming data owing to volatility following Katrina.

In the 12 months to August, headline inflation rose by 3.6 per cent while core inflation rose 2.1 per cent. The minutes of the Fed's August meeting showed increased concern about inflation risks at a time when there is very little spare production capacity or labour market slack in the economy.

Michael Moskow, president of the Chicago Federal Reserve, said in a speech last week: "Because the economy is running nearer to potential, unfavourable cost developments are more likely to pass through to core inflation."

Janet Yellen, San Francisco Fed president, dwelled a bit more on the potential risks to growth, but said: "While a 'whisker' of slack may still remain [in the labour market], we probably can't count on slack to hold inflation down."

An important topic at next week's meeting will be whether the Federal Reserve should alter the forward-looking language in its policy statement, which says that monetary policy is "accommodative" and that the Fed is likely to continue raising the federal funds rate at a "measured" pace. This was already a live topic before Katrina, as the Fed gets closer to restoring rates to a neutral level.

Some Fed watchers expect the policymaking Federal Open Market Committee to drop the measured-pace language next week, stressing the greater uncertainty in the outlook.