Fuel costs boost US con­sumer prices

Gulf News - - BUSINESS -

US con­sumer prices recorded their big­gest in­crease in eight months in Septem­ber as fuel prices soared in the wake of hur­ri­cane-re­lated pro­duc­tion dis­rup­tions at oil re­finer­ies in the Gulf Coast area, but un­der­ly­ing in­fla­tion re­mained muted.

The mixed re­port from the Labour De­part­ment yes­ter­day comes as Fed­eral Re­serve of­fi­cials have been en­gaged in a vig­or­ous de­bate on the in­fla­tion path and sug­gests a De­cem­ber in­ter­est rate in­crease is not a done deal.

As a re­sult, the dol­lar fell against a bas­ket of cur­ren­cies, while prices for US Trea­suries rose. US stock in­dex fu­tures rose. Pol­i­cy­mak­ers could, how­ever, find so­lace from an­other re­port in­di­cat­ing that the econ­omy was swiftly re­cov­er­ing from the dam­age in­flicted by Hur­ri­canes Har­vey and Irma, with a strong re­bound in re­tail sales last month.

“The firm­ness in re­tail sales should over­ride the en­dur­ing mys­tery of low in­fla­tion to spur a De­cem­ber Fed rate hike,” said Sal Gu­atieri, a se­nior econ­o­mist at BMO Cap­i­tal Mar­kets in Toronto.

The Labour De­part­ment said its Con­sumer Price In­dex in­creased 0.5 per cent last month af­ter ad­vanc­ing 0.4 per cent in Au­gust.

Septem­ber’s rise was the big­gest since Jan­uary and pushed up the year-on-year gain in the CPI to 2.2 per cent from 1.9 per cent in Au­gust. The in­crease in the CPI was broadly in line with economists’ ex­pec­ta­tions.

Petrol prices surged 13.1 per cent last month, ac­count­ing for 75 per cent of the rise in the CPI. The in­crease in fuel prices was the largest since June 2009 and fol­lowed a 6.3 per cent ad­vance in Au­gust.

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