US Inflation Advances as Consumer Prices Rise 0.3% in September 2011

US inflation in September 2011 calmed ever-so-slightly when compared against the previous month — a second straight month of modest taming. But American consumers continued to hand out larger sums of money to pay for their routine purchases. Worse, US inflation on an annual basis marked its biggest increase in 3 years, imparting a remindful and painful pull on consumers’ wallets.

Consumer prices rose 0.3 percent in September after rising 0.4 percent in August and jumping 0.5 percent in July, according to a US government report released Wednesday morning. The increase was mostly in line with economists’ expectations, and led by higher energy and food prices.

Increases in energy and food indexes were the main cause of the seasonally adjusted all items increase," noted the US Labor Department in its monthly Consumer Price Index (CPI) report. "The gasoline index continued to rise, and indexes for electricity and natural gas increased as well. Broad increases in food indexes also continued in September, with the food at home index rising 0.6 percent for the third month in a row and no major grocery store food group indexes declining."

Per the numbers, the department said energy prices rose 2.0 percent in September, which was up from the 1.2 percent increase in the previous month. Prices at the pump impacted consumers most as the cost of gasoline was 2.9 percent higher versus the prior 1.9 percent increase. Gasoline prices have soared 33.3 percent over the past 12 months.

The core US inflation rate, which strips out volatile food and energy prices, advanced 0.1 percent in September, down from the 0.2 percent increase seen during each of the previous two months. The level was the smallest gain since March and a bit under expectations. Core consumer goods and services to climb higher included gains of:

  • 0.2 percent for medical care services
  • 0.1 percent for shelter
  • 0.5 percent for transportation

The Labor Department noted that the indexes for airline fares, tobacco, and personal care also increased. However, the cost of clothing declined 1.1 percent — the biggest fall since 1998, after rising sharply for five straight months. Used car prices were down 0.6 percent as well after having advanced in all months but January. New vehicle prices were flat for a third consecutive month.

US inflation rose 3.9 percent in the 12 months ending in September following a previous reading of 3.8 and then 3.6 percent rates in each of the year-over-year gains ending in May, June and July. The annual rate was at 1.1 percent as recently as November and registered a record low of 0.6 percent in October 2010.

The 12-month core rate remained at 2.0 percent — matching the previous setting which was the biggest in nearly three years. The longer term core inflation index is the one most watched by the Federal Reserve. The core index stands at the top of the Fed’s target range which is often cited from 1.5 to 2.0 percent.

"The headline data, it appeared to be pretty much on target. Our response is that we are seeing inflation pressure slowly build up in the economy," Reuters quoted Fred Dickson, Chief Market Strategist at D.A. Davidson & Company in Lake Oswego, Oregon.

"While the (monthly) core rate was only up 0.1 percent, it still has pushed the core level up to 2 percent which is at the top end of the Fed’s targeted zone for no action. So the economy has basically strengthened to the point where we are seeing companies pass along inflation increases and at some point the Fed has to take notice of what is happening in terms of inflation."

US Labor Department inflation data on a 12-month basis and between March and September follows:

September 2011 Consumer Prices – Gains (percent)

Mar
2011
Apr
2011
May
2011
June
2011
July
2011
Aug
2011
Sept
2011
12
Month
All items 0.5 0.4 0.2 -0.2 0.5 0.4 0.3 3.9
  Food 0.8 0.4 0.4 0.2 0.4 0.5 0.4 4.7
    Food at home 1.1 0.5 0.5 0.2 0.6 0.6 0.6 6.3
    Food away from home 0.3 0.3 0.2 0.3 0.2 0.4 0.2 2.6
  Energy 3.5 2.2 -1.0 -4.4 2.8 1.2 2.0 19.3
    Energy commodities 5.5 3.1 -1.9 -6.3 4.3 1.6 2.7 32.8
      Gasoline (all types) 5.6 3.3 -2.0 -6.8 4.7 1.9 2.9 33.3
      Fuel oil 6.2 3.2 -0.8 -2.2 -1.7 -0.4 -0.7 33.4
    Energy services 0.2 0.6 0.6 -1.1 0.4 0.4 0.7 2.1
      Electricity 0.7 0.2 0.8 -1.6 0.8 -0.1 0.7 2.7
      Utility (piped) gas service -1.4 1.9 -0.3 0.4 -1.2 2.2 0.8 0.2
  All items less food, energy 0.1 0.2 0.3 0.3 0.2 0.2 0.1 2.0
    Comm. less food, energy 0.1 0.4 0.5 0.5 0.3 0.4 -0.2 2.0
      New vehicles 0.7 0.7 1.1 0.6 .0 .0 .0 3.6
      Used cars and trucks 0.8 1.2 1.1 1.6 0.7 0.9 -0.6 5.1
      Apparel -0.5 0.2 1.2 1.4 1.2 1.1 -1.1 3.5
      Medical care 0.5 0.5 .0 -0.1 .0 0.1 0.2 3.0
    Services less energy 0.2 0.1 0.2 0.1 0.2 0.2 0.2 2.0
      Shelter 0.1 0.1 0.2 0.2 0.3 0.2 0.1 1.7
      Transportation 0.5 0.2 0.1 -0.3 -0.1 0.2 0.5 3.2
      Medical care 0.1 0.3 0.3 0.3 0.3 0.3 0.2 2.8

 

The US Labor Department has scheduled the October 2011 Consumer Price Index data release for November 16, 2011 at 8:30 AM Eastern Time. Current and historic CPI files are used as the core data in the Inflation Calculator.

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