U.S. Consumer Prices Rose 0.1% in September -- Update
12 October 2018 - 01:45AM
Dow Jones News
By Harriet Torry
WASHINGTON -- U.S. consumer prices rose only slightly in
September, a sign inflationary pressures remain in check despite a
solid economic growth and low unemployment rate.
The consumer-price index, which measures what Americans pay for
everything from hair spray to hotel room service, rose 0.1% in
September after rising a seasonally adjusted 0.2% in August, the
Labor Department said Thursday. That undershot economists'
expectations of a 0.2% rise.
Jim O'Sullivan, an economist at High Frequency Economics Ltd.,
said weak inflation momentum in the last two months "will keep the
debate alive over whether the trend is up."
In the 12 months through September, overall prices rose 2.3%,
the smallest year-over-year change since February. Core prices were
up 2.2% on the year, the same rate as in August.
In a positive sign for American workers, modest prices increases
caused the pace of inflation-adjusted earnings to rise at the
strongest rate in six months. Average hourly earnings rose a
seasonally adjusted 0.3% in September and are up 0.5% from
September 2017.
Costco Wholesale Corp. boosted entry-level hourly pay by $1 to
$14 earlier this year "and I believe that you'll see more pressure
on it," Chief Financial Officer Richard Galanti said last week
after the retailer posted strong sales growth in its most recent
quarter.
Thursday's report showed an index of energy prices fell 0.5% in
September, and gasoline costs dropped a seasonally adjusted 0.2%
after rising 3% in August. The price index for used cars and trucks
also declined considerably on the month, falling 3%. Food prices
were flat.
Meanwhile, a stronger dollar is likely keeping a lid on the
prices of goods, many of which are either purchased overseas or
compete with imports. Rising interest rates and faster economic
growth in the U.S. compared with other developed economies have
helped push the dollar higher in recent months. The WSJ Dollar
Index, which measures the greenback against a basket of other
currencies, rose about 5% from June to September.
Thursday's reading comes roughly two weeks after Federal Reserve
policy makers raised their benchmark short-term interest rate to a
range between 2% and 2.25%. Officials signaled they expected to
lift the rate again later this year and through 2019 to keep a
strong economy on an even keel.
"The dual situation of relatively low inflation and a strong
economy should help calm the fears of Fed officials and others who
think the Fed needs to be aggressive in increasing interest rates,"
Navy Federal Credit Union economist Robert Frick said in a note to
clients, adding "the data says price and wage growth are not in
danger of overheating the economy."
The risk that inflation climbs higher and faster than
anticipated could require the Fed to raise rates "a little bit
quicker," Fed Chairman Jerome Powell said at his Sept. 26 press
conference. He added, "We don't see that. We really don't see
that."
"Inflation is low and stable," he said.
Thursday's report follows the Labor Department's latest
employment report, which showed average hourly earnings for
private-sector workers rose 2.8% in September from a year earlier,
a slight pullback from the 2.9% annual pace of wage growth in
August -- but still well above the 2.3% pace of year-over-year
inflation.
On Wednesday, a gauge of U.S. business prices showed signs of
bouncing back in September after a slowdown over the summer.
The producer-price index, a measure of the prices businesses
receive for their goods and services, increased a seasonally
adjusted 0.2% in September from a month earlier, the Labor
Department said. The rise in September prices came after two months
of sluggishness and was propelled by a hefty increase in
transportation prices.
Theo Francis contributed to this article.
Write to Harriet Torry at harriet.torry@wsj.com
(END) Dow Jones Newswires
October 11, 2018 10:30 ET (14:30 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.