Consumer Prices Rise 0.1% as Inflation Remains Muted
The consumer-price index climbed 0.1% after decreasing 0.2% in August, a Labor Department report showed in Washington.
The median forecast of 84 economists surveyed by Bloomberg News called for no change. Excluding volatile food and fuel, the so-called core measure also advanced 0.1% after being little-changed in August.
A slowdown in global economic growth and declining energy and commodity costs will restrain overall price pressures this month, indicating contained inflation will give Fed officials room to keep interest rates low well into 2015. Lower fuel bills are also helping boost consumer confidence and purchasing power, which will underpin the U.S. expansion.
“Inflation remains fairly subdued,” Millan Mulraine, deputy head of U.S. research and strategy at TD Securities said. “A lot of it is because of falling gasoline prices. With wage growth remaining weak, there’s hardly any catalyst for price pressures. It’s a positive for consumer spending.”
Estimates in the Bloomberg survey of economists ranged from a drop of 0.2% to gains of 0.2%.
Overall consumer prices increased 1.7% in the 12 months ended in September, the same as in the year ended August.
Economists in the Bloomberg survey had forecast that the core gauge, which excludes volatile food and fuel costs, would rise 0.1%.
The core CPI climbed 1.7% from September 2013, also matching the prior month’s increase.
Energy costs decreased 0.7% from a month earlier, and will probably drop even more this month.
The average cost of a gallon of regular gasoline fell to $3.09 as of Oct. 20, the lowest since 2011, according to AAA, the biggest U.S. motoring group.
Households are getting relief as their fuel bills plunge. The drop in fuel costs will free up as much as $60 billion over the next year that the consumers can spend on other purchases, according to economists at Barclays Plc and JPMorgan Chase & Co.
Even the muted increase in the cost of living is enough to depress paychecks. Hourly earnings adjusted for inflation dropped 0.2% in September, after a revised 0.6% increase the prior month, a separate report from the Labor Department showed. They were up 0.3% over the past 12 months, following a 0.5% gain in the year through August.
The CPI report showed food costs rose 0.3%. Costs for shelter, medical care and personal-care items rose last month, while prices of airline fares and used vehicles dropped.
The consumer-price report also suggested the estimated monthly payment for retired workers receiving Social Security benefits will rise 1.7% in 2015. It’s up to the Social Security Administration to issue the official figures based on today’s data.
