U.S. consumer prices drifted higher in September, led by higher prices for cars, energy and medical care that offset the first declines ever recorded in residential rents and home ownership costs, the Labor Department reported Thursday.
The consumer price index rose a seasonally adjusted 0.2% in September. The core CPI -- which excludes volatile food and energy prices -- also increased 0.2% in September on a seasonally adjusted basis.
The increases were a tenth of a percentage point higher than expected by economists surveyed by MarketWatch. See Economic Calendar.
In the past year, the CPI has fallen 1.3%, while the core rate has risen 1.5%. Prices for food fell 0.2% in the past year, the first decline in more than 40 years.
The CPI rose 0.4% in August. The core CPI increased 0.1% in August.
The CPI report indicates little inflationary pressure in an economy that is still underperforming on an historical scale.
Fed officials have lowered their concerns about outright deflation in recent months, but they have said inflation is likely to remain low for some time as slack in the economy constrains pricing power.
Over the longer term, however, the massive fiscal and monetary stimulus being pumped into the economy threatens to unleash inflation. The government will have to be nimble to remove the stimulus at the right time. For now, getting the economy growing again is the only job that matters.
Because consumer prices fell over the past year, those receiving Social Security benefits will see no cost-of-living raise in their benefit check for next year. The COLA is determined by the change in the separate CPI for workers from the third quarter of one year to the third quarter of the next. The CPI-W fell 2.1% in the past year.
In September, energy prices rose 0.6%, including a 1% rise in gasoline prices. Food prices fell 0.1%, the sixth decline in the past eight months.
Shelter prices were flat in September. Owners equivalent rent and residential rents, which together account for more than 30% of the CPI, each fell 0.1%, the first declines since 1992, when the government first tracked those prices. Prices of hotel and motel rooms rose 1.5%.
Details
With prices rising faster than wages, real hourly earnings fell 0.1% in September, the government said. Real weekly earnings fell 0.4%. Real weekly earnings are up 2.5% in the past year, but have fallen 1.9% since December.
Food prices fell 0.1%. Prices of food at home dropped 0.3%, including a 1.2% drop in fruit and vegetable prices and a 1% decline in meat prices.
Energy prices rose 0.6% in September, but are down 21.6% in the past year.
Medical care prices rose 0.4%, the largest increase since April.
Apparel prices rose 0.1%.
Prices of commodities rose 0.3% in September, while services prices rose 0.1%. Prices of commodities excluding food and energy rose 0.3%.
Education and communication prices rose 0.1%. Recreation prices fell 0.1%. Tobacco prices rose 1%.
