US con­sumer prices in­dex in­crease 0.2%

Kuwait Times - - BUSINESS -

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

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