Core consumer prices muted in September
Consumer prices outside food and energy rose less than expected in September to post their smallest gain in six months, a government report showed on Wednesday, suggesting inflation pressures remained contained.
The Labor Department said its core Consumer Price Index edged up 0.1 percent as prices for new cars were flat and rentals rose modestly. The index increased 0.2 percent in August. Economists had expected core CPI to rise 0.2 percent last month.
Overall consumer prices increased 0.3 percent last month, as expected, after advancing 0.4 percent in August.
The moderate rise in consumer prices offered assurance that inflation pressures remained in check despite a sharp rise in wholesale prices last month.
It also suggested the Federal Reserve had some wiggle room for further monetary policy easing, should the economic recovery falter.
Core consumer prices last month were restrained by new motor vehicle costs, which were unchanged for a third straight month. This likely reflects a normalization in supplies after the March earthquake in Japan disrupted production.
Prices for used cars and trucks fell 0.6 percent after months of gains. Apparel prices dropped 1.1 percent, the largest decline since September 1998. Shelter costs edged up 0.1 percent, the smallest rise since April, as owners' equivalent rent edged up 0.1 percent after rising 0.2 percent in August.
The Bureau of Labor Statistics uses owners equivalent rent to measure the amount homeowners would pay to rent or would earn from renting their property.
In the 12 months to September, core CPI increased 2 percent after rising 2 percent in August.
This measure has rebounded from a record low of 0.6 percent in October and the Fed would like to see that closer to 2 percent.
A 2.9 percent increase in the price of gasoline pushed overall consumer prices last month. Gasoline had risen 1.9 percent in August. Food prices gained 0.4 percent after increasing 0.5 percent in August. In the 12 months through September, consumer prices rose 3.9 percent after advancing 3.8 percent in August.
(Reporting by Lucia Mutikani; Editing by Neil Stempleman)
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