Consumer prices’ rise slower in September
A key measure of U.S. consumer prices rose in September at the slowest pace in four months, signaling little threat of accelerating inflation as the economy recovers.
The consumer price index rose 0.2% from the month before after a 0.4% gain in August. Compared with a year earlier, the gauge increased 1.4%, after August’s 1.3% rise.
The core consumer price index, which excludes volatile food and fuel costs and is viewed by Federal Reserve policymakers as a more reliable gauge of price trends, also increased 0.2% from the August and climbed 1.7% from a year ago, Labor Department figures showed Tuesday.
The moderation in consumer inflation occurred despite another hefty increase in used-motor vehicle prices and reflects subdued demand in some parts of the economy as the coronavirus continues to disrupt business and millions of Americans remain unemployed.
Fed policymakers are determined to push inflation higher, and have signaled they expect to hold interest rates near zero at least through 2023 to help achieve that goal. The U.S. central bank targets 2% inflation, measured by the Commerce Department’s personal consumption expenditures price index. That gauge has been almost continually below that goal since 2012.
Fed Chairman Jerome Powell said in late August that the central bank will now aim to achieve 2% inflation on average over time and will tolerate periods when price pressures moderately overshoot that level.
The consumer price report showed used-vehicle prices jumped by 6.7% from a month earlier, the most in data back to 1969. Demand for used cars and trucks has been rising since the coronavirus pandemic temporarily shuttered auto plants, constricting supplies of new vehicles. Even after the plants reopened, consumers have been searching for alternatives to public transportation and ride-sharing services, contributing to the increase in prices.
At the same time, inflation was restrained by a modest gain in shelter costs, which rose 0.1% for a second month. Compared with September 2019, shelter costs were up 2%, the smallest annual gain since February 2012.