Gasoline costs rev up US consumer prices
washington — US consumer prices recorded their biggest increase in eight months in September as gasoline 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 Labor Department on Friday 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 Labor 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.
Gasoline prices surged 13.1 per cent last month, accounting for 75 per cent of the rise in the CPI. The increase in gasoline prices was the largest since June 2009 and followed a 6.3 per cent advance in August.
The Labor Department said Harvey was reported to have impacted refinery capacity in the Gulf Coast and was likely a factor in last month’s increase in gasoline prices. Outside gasoline, price pressures were benign. Excluding the volatile food and energy components, consumer prices gained 0.1 per cent in September as the increase in rental accommodation slowed and the cost of new motor vehicles and medical care declined.
The so-called core CPI rose 0.2 per cent in August. In the 12 months through September, the core CPI increased 1.7 per cent. —