U.S. con­sumer prices rose 0.1% in Septem­ber

In­creases caused in­fla­tion-ad­justed earn­ings pace to rise at strong­est rate in six months

The Peterborough Examiner - - Business - 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 in­fla­tion­ad­justed 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-overyear 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.


The con­sumer price in­dex rose 0.1% in Septem­ber af­ter ris­ing a sea­son­ally ad­justed 0.2% in Au­gust.

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