U.S. consumer prices rise, but underlying inflation benign

WASHINGTON Wed Oct 30, 2013 8:32am EDT

A woman shops with her daughter at a Walmart Supercenter in Rogers, Arkansas June 6, 2013. REUTERS/Rick Wilking

A woman shops with her daughter at a Walmart Supercenter in Rogers, Arkansas June 6, 2013.

Credit: Reuters/Rick Wilking

WASHINGTON (Reuters) - U.S. consumer prices rose modestly in September but there was little sign of underlying inflation in the economy, which should give the Federal Reserve scope to maintain its monthly bond purchases.

The Labor Department said on Wednesday its Consumer Price Index increased 0.2 percent last month as energy prices rebounded, after edging up 0.1 percent in August.

In the 12 months through September, the CPI increased 1.2 percent, the smallest gain since April. It had advanced 1.5 percent in August.

Economists polled by Reuters had expected consumer prices to rise 0.2 percent last month and increase 1.2 percent from a year ago.

The benign inflation environment should allow the Fed to stay the course on its monthly bond purchases as it tries to stimulate the economy through low interest rates.

The Fed targets 2 percent inflation, although it tracks a gauge that tends to run a bit below the CPI.

Officials from the central bank are expected to keep their monthly $85 billion bond purchasing program in place when they conclude a two-day meeting later on Wednesday.

Stripping out the volatile energy and food components, the so-called core CPI nudged up 0.1 percent, rising by the same margin for a second consecutive month.

That took the increase over the past 12 months to 1.7 percent after rising 1.8 percent in August.

This measure touched a two-year low of 1.6 percent in June and the slowdown last month could catch the attention of some Fed officials who are concerned about inflation being too low.

Last month, inflation was lifted by a 0.8 percent rise in energy. That accounted for about half of the rise in the CPI last month. Energy prices had dropped 0.3 percent in August.

Food prices were flat in September. That was the weakest reading since May.

Within the core CPI, housing and medical care costs advanced, maintaining a recent trend. Owners' equivalent rent of primary residence rose 0.2 percent after rising 0.3 percent in August.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
AZreb wrote:
Ignore the costs for energy and food – that makes the CPI acceptable and also inflation numbers. Add food costs to the other consumer costs that have risen and it is getting more difficult for people to pay their bills, feed their families (now food stamp cuts). Winter fuel costs will also hurt families.

Most of us are not economists, but we do know how difficult things are when we try to manage our finances. We have a certain amount to spend and that is it! No bailouts for us, no unlimited credit – we make do or do without.

Nov 03, 2013 8:50am EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

Recommended Newsletters

Reuters U.S. Top News
A quick-fix on the day's news published with Reuters videos and award-winning news photography and delivered at your choice of one of four times during the day.
Reuters Deals Today
The latest Reuters articles on M&A, IPOs, private equity, hedge funds and regulatory updates delivered to your inbox each day.
Reuters Technology Report
Your daily briefing on the latest tech developments from around the world from Reuters expert tech correspondents.