Northwest Arkansas Democrat-Gazette
Consumer prices up 0.4% in October
WASHINGTON — Surging gasoline prices caused U.S. consumer prices to rise last month at the fastest pace since March.
The Labor Department said Wednesday that its consumer price index rose 0.4% in October after a flat reading in September. Gasoline prices, after drops in August and September, jumped 3.7% last month. Excluding volatile energy and food prices, so-called core consumer inflation rose just 0.2% in October.
Overall consumer prices rose 1.8% over the past year, just below the Federal Reserve’s 2% target. Core prices increased 2.3%.
Despite last month’s climb, gasoline prices are down 7.3% since October 2018.
Food prices rose 0.2% from September to October,
the biggest increase since May. New car prices fell 0.2%, the fourth straight monthly drop. But used vehicle prices rose 1.3%, the most since June.
Expenses for medical care climbed 1% for the steepest increase in three years.
Elsewhere, apparel prices fell 1.8% on the month, the most since March.
A separate Labor Department report Wednesday showed average hourly earnings, adjusted for price changes, fell 0.2% in October from a year earlier after no change in September. Higher inflation tends to erode wage gains.
Relatively tame inflation has allowed the Fed to cut short-term U.S. interest rates three times this year to support
an American economy slowed by trade disputes with China and other U.S. trading partners.
“Inflation pressures remain fairly muted, and it’s certainly not going to be on the top of the Fed’s radar screen any time soon,” said Richard Moody, chief economist at Regions Financial Corp. “The broader story hasn’t changed.”
The subdued annual core reading, driven by a deceleration in rents and falling apparel prices, signals that policymakers face a longer wait to see whether easing since July is spurring faster price gains. Low unemployment and tariffs on Chinese goods may support inflation, though Chinese and American negotiators are moving toward a deal to roll back levies.
President Donald Trump on Sept. 1 added tariffs on $112
billion of Chinese goods, on top of other levies already in effect. He said Tuesday that a deal is close, but the U.S. will “substantially” increase tariffs on China if the first step of a broader agreement isn’t reached.
The Labor Department’s consumer price index tends to run higher than the Commerce Department’s personal consumption expenditures price index, which the Fed officially targets. The core personal consumption expenditures index that policymakers watch for a better read on underlying price trends has shown signs of firming in recent months, though September’s annual gain of 1.7% was below the 2% objective.
Fed Chairman Jerome Powell said in congressional testimony Wednesday that inflation returning to near the central bank’s 2% objective is likely, though he added that persistently low readings could lead to an “unwelcome” slide in the public’s longer-run expectations for price gains. Gauges of investors’ and consumers’ inflation expectations remain near historic lows.
The measure for rent of primary residence rose 0.1% from a month earlier, the smallest gain since April 2011, Labor figures showed. The broader measure of shelter costs, which make up about a third of the total consumer price index, also climbed 0.1% as prices for hotels and motels, which can be volatile, dropped by a record 4.4%.