Consumer prices flat, inflation eases to 4.9% in September

Consumers got a respite on inflation in September, the Labor Department reported Thursday. The Consumer Price Index (CPI), which is the most watched government inflation barometer, retreated to 4.9% during the previous twelve months.

While overall U.S. consumer prices remained virtually unchanged, food prices increased and energy prices tumbled. September’s 30-day standstill follows an August monthly drop of 0.1% and an annual inflation rate of 5.4%.

Falling energy prices combined with a slowing economy eased consumer prices those two months. Inflation began its most ugly uptrend in April. It peaked to a 17-year high of 5.6 percent in July, during a time consumer and energy prices were at their highest — oil reached a record near $147 per barrel.

"Consumer price inflation has gone dormant, as the recent abrupt slowdown in world economic growth has led to sharp declines in energy costs, while weak domestic demand is putting downward pressure on retail prices in many key markets," wrote Dr. Brian Bethune, chief U.S. financial economist for Global Insight.

Oil prices tumbled Wednesday, closing on Nymex under $75 per barrel for the first time in more than one year. With less costly oil, weaker import prices and falling producer prices, inflation in October is expected to ease further.

Consumer price figures for September

While the monthly Consumer Price Index reading for September was flat, the "core" CPI, which excludes volatile food and energy costs, advanced 0.1%. Both figures were better than expected. Economists were forecasting an increase between 0.1%-0.2% in overall prices and a 0.2% rise in the core CPI.

Also according to Thursday’s report, energy prices tumbled 1.9% last month, the second-straight decline. Gasoline prices slipped 0.6%, and natural gas prices tumbled 8.3%.

Other declines include:

  • Housing, which accounts for 40% of the CPI index, fell 0.1% for a second-straight month, the first back-to-back decline since 2001.
  • Clothing fell by 0.1%, compared to a 0.5% rise August
  • Transportation dropped by 0.6% after a 1.5 percent decrease in August

In contrast:

  • Rent increased 0.3%. Owners’ equivalent rent advanced 0.2%
  • Food and beverage prices increased 0.6%.
  • Medical care prices climbed a modest 0.3%

New-car prices declined for the second straight month, falling 0.7 percent after a 0.6 percent decrease in August. Used-cars and trucks fell sharply in September as well, declining 1.8 percent after a 0.3 percent fall in August.

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