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U.S. industrial production drops most in 3 years

WASHINGTON — U.S. industrial production fell in August by the largest amount in more than three years as factories produced fewer cars and other manufactured goods and Hurricane Isaac triggered shutdowns along the Gulf Coast.

Industrial production dropped 1.2 percent last month compared to July, the Federal Reserve said this morning. It was the biggest setback since a 1.7 percent decline in March 2009 when the country was in recession.

Manufacturing output, the most important component of industrial production, fell 0.7 percent, led by a 4 percent drop in output at auto plants.

In other economic news, more expensive gas drove up consumer prices in August by the most in three years. But outside energy, inflation was tame.

The Labor Department said today that consumer prices rose a seasonally adjusted 0.6 percent last month, the first increase since March. Higher gas prices accounted for 80 percent of the increase. Food prices rose 0.2 percent.

Excluding the volatile food and energy categories, core prices edged up 0.1 percent for the second straight month.

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