Consumer prices rose 0.3 percent in August as gasoline and other energy products shot up for a second straight month. But elsewhere inflation remained a no-show with clothing prices down for a fourth straight month and airline fares retreating after a big jump in July.
The Labor Department said today the August increase in its Consumer Price Index -- the most closely watched inflation gauge -- matched the 0.3 percent July advance.
In both months, energy was the big force pushing prices upward. For August, two-thirds of the total price increase was attributed to a 2.7 percent surge in energy costs. Food costs rose a much more modest 0.2 percent.
This performance of the "core" rate of inflation was even better than economists' expectations and will provide ammunition for those arguing there is no need for the Federal Reserve to boost interest rates for a third time.
Motorola bid totals $11 billion
NEW YORK (AP) -- Motorola Inc. made a bold bet today on the future of cable television, announcing it had agreed to pay about $11 billion in stock for General Instrument Corp., the largest producer of cable TV set-top boxes.
General Instrument's set-top box operations dominate one of the key technologies that is revolutionizing home entertainment.
Motorola, best known for making cellular phones and pagers, is looking for a stronger presence in the fast-growing market for broadband services.
Xerox lawsuit against H-P dismissed
ROCHESTER (AP) -- A federal court has dismissed a lawsuit Xerox Corp. filed last year against Hewlett-Packard Co., effectively ending one of five technology-related lawsuits between the two office equipment companies.
Xerox had filed the lawsuit in May last year in federal court seeking to block H-P from selling inkjet supplies and printers, including some DeskJet models, using the disputed technology.
U.S. District Judge Michael Telesca ruled Tuesday that H-P did not infringe on Xerox's patent and dismissed Xerox's action against H-P.
North American buys Allied Van Lines
FORT WAYNE, Ind. (AP) -- North American Van Lines Inc. plans to merge with Allied Van Lines in a $450 million deal that will create the world's largest moving company.
NA Holding Corp., which will based in Fort Wayne, would have more than $2 billion in annual revenues, locations in 36 countries and a network of 1,100 agents throughout North America.
The deal calls for Clayton, Dubilier & Rice Inc., the New York investment firm that owns most of North American, to pay Allied's London-based parent, NFC PLC, $400 million in cash and $25 million in preferred and common stock that represents a 20 percent stake in NA Holding Corp.
NFC will receive warrants to acquire an additional 10 percent stake in the company.
CD&R will hold on to 55 percent of NA Holding. The remainder will be held by North American management and agents.
Yields rise on 52-week T-bills
WASHINGTON (AP) -- The interest rate on 52-week Treasury bills rose in Tuesday's auction to the highest level since July.
The discount rate was 5.0 percent, up from 4.945 percent at the last auction on Aug. 17.
The bills will carry an equivalent coupon interest rate of 5.285 percent with each $10,000 in face value selling for $9,494.40.
In other business news
Herbalife International Inc. shares rose 60 percent after the chief executive of the dietary supplement company said he would buy outstanding shares he doesn't already own for $500 million. Shares of Herbalife rose $5.53 1/8 Tuesday to close at $14.68 3/4 , a 52-week high, on the Nasdaq stock market.
H.J. Heinz Co., the maker of Heinz Ketchup, and Bestfoods, the maker of Hellman's mayonnaise, are discussing a deal that would create the nation's second biggest food company, the Wall Street Journal reported today. Pittsburgh-based Heinz has annual sales of $9.3 billion, while Bestfoods, of Englewood, N.J., has about $8.4 billion for a combined total of $17.7 billion.
About 340 former employees of IBM's Lexington plant will receive $15.5 million to settle a lawsuit alleging the company misled them about an early retirement program. The settlement will include some lump-sum payments of past-due benefits to retirees.