US consumer prices index increase 0.2%
WASHINGTON: US consumer prices increased in October after two straight months of declines as the cost of goods and services rose, signs of firming inflation that further support expectations that the Federal Reserve will raise interest rates next month. The Labor Department said yesterday its Consumer Price Index increased 0.2 percent last month, reversing September’s 0.2 percent drop. In the 12 months through October, the CPI advanced 0.2 percent after being unchanged in September. The modest increase in prices was in line with expectations and suggests that the drag on inflation from a strong dollar and lower oil prices was starting to ease. Signs of stabilization in prices after a recent downward spiral are likely to be welcomed by Fed officials and give them some confidence that inflation will gradually move toward the central bank’s 2.0 percent target. Inflation has persistently run below target.
In the wake of a robust October employment report, the US central bank is expected to raise its benchmark overnight interest rate from near zero at its Dec 15-16 meeting. There is hope tightening labor market conditions, characterized by a jobless rate now in a range that some Fed officials view as consistent with full employment, will put upward pressure on wages and drive inflation toward its target. The dollar rose modestly against a basket of currencies after the data, while prices for US Treasuries extended losses. US interest rate futures implied a 70 percent chance of a December rate hike, up from 68 percent on Monday, according to CME Group’s FedWatch.
The so-called core CPI, which strips out food and energy costs, gained 0.2 percent after a similar rise the prior month. Rents and medical costs accounted for much of the increase in the core CPI last month. In the 12 months through October, the core CPI increased 1.9 percent after rising by the same margin in September. The Fed tracks the personal consumption expenditures price index, excluding food and energy, which is running below the core CPI. The dollar’s 18 percent rise against the currencies of the United States’ main trading partners since June 2014 has made imported goods less expensive, weighing on prices of goods such as apparel and automobiles. — Reuters
PITTSBURGH: A customer refuels her car at a Costco in Pittsburgh. US consumer prices rose modestly in October, 2015 as low gasoline costs and a strong dollar have suppressed inflation. — AP