Higher gas costs drove up U.S. consumer prices in September for the second straight month. Outside energy, there was little sign of inflation.
The Labor Department said today (Oct. 16) that the consumer price index rose a seasonally adjusted 0.6% last month, matching the August increase. In the past 12 months, prices have increased 2%. That’s in line with the Federal Reserve’s inflation target, the Associated Press reported.
Excluding volatile food and energy costs, prices rose just 0.1%. In the past year, so-called core prices have increased 2%.
“Pump prices are fueling headline inflation, but underlying … trends remain benign,” Robert Kavcic, an economist at BMO Capital Markets, said in a note to clients.
Modest inflation leaves consumers with more money to spend, which can boost growth. Low inflation also allows the Federal Reserve to continue with its efforts to rekindle the economy. If the Fed were worried that prices are rising too fast, it might have to raise interest rates.
The small increase in prices prompted the government to raise Social Security benefits 1.7% next year for 56 million recipients. The government increases benefits each year if prices rise.
The government’s report showed that food prices rose only 0.1%. The cost of meat, chicken and eggs fell. Dairy prices rose.
Gas prices rose sharply over the summer and into September, but have since come down. The average price for a gallon of gas nationwide was $3.77 today, about 9 cents below last month’s level.
Tuesday’s report noted that gas prices rose a seasonally adjusted 7% in September, below August’s 9% increase.