US Inflation in September Falls; Annual Inflation Rate Flat

US inflation fell for a second straight month in September as American consumers once again paid more for food but a lot less for gas. Overall costs of goods and services fell by the most in eight months, driving the annual inflation rate to zero, according to a government report released Thursday, Oct. 15, 2015.

Consumer prices declined 0.2% in September, their biggest drop since January, after sliding 0.1% in August, the US Labor Department said in a monthly report on the Consumer Price Index. The CPI measures what Americans pay for everything from rent to cars to eggs.

Prices at the pump plummeted 9% last month, the most since January, and after diving 4.1% in August. They are down a whopping 29.6% from a year ago. The broader pricing category for energy, which combines items like gasoline, electricity and fuel oil, declined 4.7% in September and is down 18.4% from a year earlier.

Still, grocery bills throughout the United States continue to advance. The cost of food climbed for a fourth month in a row, up 0.4% last month after rising 0.2% in each of the two previous months and 0.3% in June. Food prices have shot up 1.6% in the last 12 months. September’s increase was attributed mostly to higher prices for dairy, fruits and vegetables as costs declined for meats, poultry, fish, and eggs.

Core consumer prices, which exclude the almost always more volatile food and energy items, rose 0.2% last month following a 0.1% increase in August.

"The indexes for shelter, medical care, household furnishings and operations, and personal care all increased," the BLS report said. While the "indexes for apparel, used cars and trucks, new vehicles, and airline fares were among those that declined."

Housing was a big part of the increase. Rent went up 0.4% last month, 2% over the last six months — the most since 2007, and 3.7% over the last year.

Housing is "still probably the biggest support of inflation," Bloomberg News quoted Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, who correctly forecast the overall index. "Inflation is generally well-contained, however if you strip out the impact of energy prices, we are seeing a bit firmer pricing picture."

US inflation was unchanged in the 12 months ended September after matching annual gains of 0.2% through the prior two months. (See recent inflation rates and historical inflation rates.)

In rounding out the Labor Department’s report, core US inflation increased 1.9% on an annual basis after three straight gains of 1.8%. The increase was the most since July 2014.

"The headline figure was once again depressed by weakening in gasoline prices, but core prices were a little stronger than generally expected," the WSJ quoted Jim O’Sullivan, chief U.S. economist for High Frequency Economics in a note to clients.

The 12-month core reading is the benchmark inflation rate monitored by the Federal Open Market Committee (FOMC) as it helps the central bank decide where to set the key interest rate. The Fed has a 2% annual inflation target.

"Although the case for a December hike took a hit … this more-interesting-than-usual core CPI figure will give the hawks something to talk about," Reuters quoted Jennifer Lee, an economist at BMO Capital Markets in Toronto.

Inflation data through to September 2015 is presented below. The table shows monthly and annual percentage changes in the prices of major consumer goods and services. The US Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) monitors these prices around the country, analyzes them, and then summarizes their results in monthly reports.

March 2014 – September 2015 Consumer Prices – Gains & Losses in Percent

  Mar 2015 Apr 2015 May 2015 June 2015 July 2015 August 2015 September 2015 12 Month
All items 0.2 0.1 0.4 0.3 0.1 -0.1 -0.2 .0
  Food -0.2 .0 .0 0.3 0.2 0.2 0.4 1.6
    Food at home -0.5 -0.2 -0.2 0.4 0.3 0.3 0.3 0.8
    Food away from home 0.2 0.2 0.2 0.2 .0 0.2 0.5 2.9
  Energy 1.1 -1.3 4.3 1.7 0.1 -2.0 -4.7 -18.4
    Energy commodities 3.8 -1.9 9.6 3.1 0.7 -4.1 -8.6 -29.5
      Gasoline (all types) 3.9 -1.7 10.4 3.4 0.9 -4.1 -9.0 -29.6
      Fuel oil 5.9 -8.4 0.7 -1.9 -3.4 -8.1 -2.4 -34.9
    Energy services -1.5 -0.5 -1.0 0.2 -0.6 0.5 -0.4 -3.0
      Electricity -1.1 .0 -1.2 0.2 -0.4 0.3 -0.5 -0.4
      Utility (piped) gas service -2.7 -2.6 .0 0.3 -1.4 1.3 -0.3 -12.1
  All items less food, energy 0.2 0.3 0.1 0.2 0.1 0.1 0.2 1.9
    Commodities less food, energy 0.3 0.1 -0.1 -0.1 -0.1 -0.1 .0 -0.5
      New vehicles 0.2 0.1 0.2 0.1 -0.2 .0 -0.1 0.5
      Used cars and trucks 1.2 0.6 -0.4 -0.4 -0.6 -0.4 -0.2 -1.7
      Apparel 0.5 -0.3 -0.5 -0.1 0.3 0.3 -0.3 -1.4
      Medical care 0.1 0.1 0.4 .0 0.1 0.3 -0.2 2.7
    Services less energy 0.2 0.3 0.2 0.3 0.2 0.1 0.3 2.7
      Shelter 0.3 0.3 0.2 0.3 0.4 0.2 0.3 3.2
      Transportation .0 0.1 0.7 0.4 -0.2 -0.3 0.1 2.2
      Medical care 0.4 0.9 0.2 -0.2 0.1 .0 0.3 2.4

 

US inflation information from the BLS is usually published around mid-month, like this month, and presents consumer prices through to the previous month. The Consumer Price Index for October and through to the latest annual period becomes public on November 17, 2015.

CPI data is used in calculating inflation rates and it is the backbone for this site’s inflation calculator. The US Inflation Calculator provides accumulated inflation and the change in buying power of the dollar over time.

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