Used Vehicle Prices in September Again Drives Inflation Higher; Annual Rate at 1.4%

U.S. inflation increased for a fourth straight month in September — again lifted in great part by used vehicle prices, according to a government report published Tuesday, Oct. 13, but its pace of advance was also the slowest in those four months.

The inflation landscape over the longer 12-month period did not change significantly from the previous reading with, for example, food prices higher and energy prices lower.

U.S. consumer prices climbed 0.2% in September after rising 0.4% in August, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a broad measure of what Americans pay for everyday items ranging from food to fuel.

Prices at the pump edged 0.1% higher after increases of 2% in August, 5.6% in July and 12.3% in June. Before then, they had declined for five straight months. Gasoline prices are 15.4% lower than a year ago. The broader index for energy, which combines items like gasoline, electricity and fuel oil, rose 0.8% higher in September after rising 0.9% in August. Energy prices year-over-year declined 7.7%.

Overall food prices for the month were unchanged after inching 0.1% higher in August. Food prices increased 3.9% year-on-year.

Excluding the more volatile food and energy components, so-called core consumer prices rose 0.2% in September following their August increase of 0.4%.

"The index for used cars and trucks continued to rise sharply and accounted for most of the monthly increase in the seasonally adjusted all items index," the Labor Department’s report noted.

Prices for used cars and trucks surged 6.7%, their biggest monthly gain since February 1969, the report adding

"The indexes for shelter, new vehicles, and recreation also increased in September. The indexes for motor vehicle insurance, airline fares, and apparel were among those to decline over the month."

New car prices advanced 0.3%. Shelter or housing costs rose 0.1% for a second month in a row, while their year-over-year level picked up 2%. Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. The index accounts for about one-third of the entire CPI.

In the headline figure, U.S. inflation rose 1.4% in the 12 months through September after rising 1.3% previously. As recently as May, the rate logged in at 0.1% for the smallest 12-month increase since September 2015. In contrast, they started 2020 at 2.5%.

For a second straight instance, core inflation rose 1.7% over the past year. Notably earlier in the year (both in May and in June), the core rate at 1.2% was the lowest since March 2011. The core, "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) as it helps the central bank decide where to set its key interest rate.

The following table of key inflation figures is for the last seven months through September, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on Oct. 13, 2020. To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.

March 2019 to September 2020 Consumer Prices – Gains & Losses in Percent

  Mar 2020 April 2020 May 2020 June 2020 July 2020 August 2020 September 2020 12 Month
All items -0.4 -0.8 -0.1 0.6 0.6 0.4 0.2 1.4
  Food 0.3 1.5 0.7 0.6 -0.4 0.1 .0 3.9
    Food at home 0.5 2.6 1.0 0.7 -1.1 -0.1 -0.4 4.1
    Food away from home 0.2 0.1 0.4 0.5 0.5 0.3 0.6 3.8
  Energy -5.8 -10.1 -1.8 5.1 2.5 0.9 0.8 -7.7
    Energy commodities -10.4 -20.0 -3.5 11.7 5.3 2.0 -0.1 -15.5
      Gasoline (all types) -10.5 -20.6 -3.5 12.3 5.6 2.0 0.1 -15.4
      Fuel oil -13.7 -15.6 -6.3 10.2 4.3 3.9 -5.3 -27.2
    Energy services -0.5 0.1 -0.5 -0.2 .0 -0.2 1.6 1.4
      Electricity -0.2 0.1 -0.8 -0.3 0.3 -0.2 0.9 0.7
      Utility (piped) gas service -1.4 0.2 0.8 .0 -1.0 -0.2 4.2 3.8
  All items less food, energy -0.1 -0.4 -0.1 0.2 0.6 0.4 0.2 1.7
    Commodities less food, energy -0.3 -0.7 -0.2 0.2 0.7 1.0 0.8 1.0
      New vehicles -0.4 .0 0.3 .0 0.8 .0 0.3 1.0
      Used cars and trucks 0.8 -0.4 -0.4 -1.2 2.3 5.4 6.7 10.3
      Apparel -2.0 -4.7 -2.3 1.7 1.1 0.6 -0.5 -6.0
      Medical care .0 -0.1 0.1 0.2 .0 -0.1 .0 0.9
    Services less energy .0 -0.4 .0 0.3 0.6 0.2 .0 1.9
      Shelter .0 .0 0.2 0.1 0.2 0.1 0.1 2.0
      Transportation -1.9 -4.7 -3.6 2.1 3.6 .0 -0.9 -5.1
      Medical care 0.5 0.5 0.6 0.5 0.5 0.1 .0 4.9

 

The BLS tends to release inflation data around the middle of a month based on consumer prices surveyed in the previous month. The Consumer Price Index (CPI) for October and the latest annual period become public on Nov. 12, 2020.

CPI data is used in calculating inflation rates and in this site’s U.S. inflation calculator. The US Inflation Calculator shows cumulative inflation and the change in buying power of the U.S. dollar over time.

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