Inflation ticked a bit higher in September as American consumers paid more for energy related items, like gasoline and electricity, and they spent more for shelter, medical care and new vehicles.
A break from higher food prices did help to contain costs, according to the latest report on consumer prices from the US Labor Department. Overall, food prices stayed about the same last month after having climbed for three straight months.
Consumer prices rose 0.2% in September, the Bureau of Labor Statistics (BLS) said Wednesday in its monthly report on the Consumer Price Index (CPI), which was delayed two weeks by the government shutdown. The CPI measures the change in prices for certain goods and services purchased by Americans, providing a broad overview that is closely monitored by economists, Fed policy-makers and investors. The figure was in line with expectations and follows a 0.1% increase in August.
Prices at the pump drove 0.8% higher in September after dropping 0.1% in the prior month. The cost of electricity also declined 0.1% in August but rose 0.5% last month. The all-encompassing energy index advanced 0.8%, a rather sharp change considering it had fallen 0.3% previously.
Stripping out the more volatile food and energy categories, the so-called core US inflation rate for September increased 0.1% for a second straight month. That was below expectations with many economists forecasting a 0.2% increase.
US inflation turned up 1.2% year-over-year through September, the smallest gain since April. The annual inflation rate rose 1.5% during the 12 months ended August. Recent inflation rates reported by the BLS for 2013 include annual increases of 2% by July, 1.8% by June, 1.4% by May, 1.1% by April, 1.5% by March, 2% by February and 1.6% by January. (View rates dating back to 1914.)
Core US inflation over the past 12 months advanced 1.7%, a touch lower than the annual reading of 1.8% in August. Moving further back, past 12-month increases include 1.7% in July, 1.6% in June, matching 1.7% in May and April, 1.9% in March, 2.0% in February and 1.9% in each of the three months before then. The core annual inflation rate is considered the benchmark, watched by the Federal Reserve as it helps decide where the central bank sets its key interest rate. The most recent 1.7% pick up is below the Fed’s 2% inflation target rate.
"There really isn’t any inflation pressure in the U.S," said Julia Coronado, chief economist for North America at BNP Paribas in New York and the top-ranked CPI forecaster over the past two years, according to data compiled by Bloomberg. "That means the Fed can focus more on the employment side of its mandate and is not constrained in any way by inflation developments."
On that front, the two-day monetary policy meeting of the Federal Open Market Committee (FOMC) ended Wednesday. The follow-up FOMC statement discussed inflation, rates and unemployment.
"The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall," the FOMC said. "The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term."
In its summation, the FOMC noted in part:
"The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments."
The following grid includes government-watched consumer goods and services and their percent price changes in March through September and over the past 12 months:
March 2012 – September 2013 Consumer Prices – Gains & Losses in Percent
|Mar 2013||Apr 2013||May 2013||June 2013||Jul 2013||Aug 2013||Sept 2013||12 Month|
|Food at home||-0.1||0.1||-0.3||0.2||0.1||0.1||.0||1.0|
|Food away from home||0.2||0.3||0.2||0.2||0.2||0.2||0.1||1.9|
|Gasoline (all types)||-4.4||-8.1||.0||6.3||1.0||-0.1||0.8||-7.5|
|Utility (piped) gas service||1.0||4.4||2.4||-0.4||-2.8||-2.3||1.8||5.3|
|All items less food, energy||0.1||0.1||0.2||0.2||0.2||0.1||0.1||1.7|
|Comm. less food, energy||-0.1||.0||.0||0.2||.0||.0||-0.1||-0.1|
|Used cars and trucks||1.2||0.6||-0.1||-0.4||-0.4||-0.1||.0||0.4|
|Services less energy||0.2||0.1||0.2||0.2||0.2||0.2||0.2||2.4|
United States inflation data is collected by the US Bureau of Labor Statistics. The BLS had originally scheduled its reporting of October inflation in the form of the Consumer Price Index (CPI) on November 15, 2013. As a result of the US government shutdown, the release date was rescheduled to November 20, 2013 at 8:30 AM ET.
The Consumer Price Index is used to calculate inflation rates and is used for this site’s Inflation Calculator. The calculator provides accumulated inflation and the change in the buying power of the US dollar from one date to another.