US consumer prices edge up
Print Edition
UNITED States consumer prices edged up slightly in September, with the overall increase held back by a third straight monthly decline in gasoline prices. The tiny gain was the latest evidence that inflation remains benign.
Consumer prices rose 0.1 percent after having fallen 0.2 percent in August, the Labor Department said yesterday. Core prices, which exclude volatile food and energy, also climbed 0.1 percent after no gain in August.
Over the past 12 months, both overall and core prices are up 1.7 percent. The increases are well below the 2 percent target for inflation set by the Federal Reserve. The modest inflationary pressures have allowed the central bank to keep interest rates at record lows to boost the economy.
Analysts said the big drop in energy prices should hold down inflation in the months ahead and provide more maneuvering room for the Fed. Many economists don’t expect the Fed to raise its key short-term rate until June next year.
“The softer inflation outlook gives more ammunition to those Fed officials who would prefer to wait longer before raising rates,” said Paul Dales, senior US economist at Capital Economics.
While low inflation has given the Fed leeway to keep interest rates low, it represents a hardship for savers. It also means millions of Americans who receive Social Security benefits get lower cost of living adjustments. The government said yesterday that based on inflation over the past year, benefits will increase 1.7 percent in January, the fifth time in the past six years that the benefit rise has been under 2 percent.
Food costs rose 0.3 percent in September and are up 3 percent over the past 12 months, exacerbated by drought conditions in parts of the country. Beef and veal prices jumped 2 percent in September and are up 16.7 percent since January.
Energy prices fell 0.7 percent, the third straight monthly drop. The index includes a third decline in gasoline prices, which fell 1 percent in September and are down 3.6 percent from a year earlier.
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