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Energy drives US consumer prices to 9-month high in October
WASHINGTON, Nov 15, 2018 (BSS/AFP) – US consumer inflation got a bump in
October, as prices for gasoline and electricity shot up, rising along with
the cost of shelter and medical care, the government reported Wednesday.
The increase in overall consumer prices was the largest in nine months but
one closely-watched measure suggested underlying price pressures remained
tame.
Costs for used cars and trucks also jumped last month, reversing declines
in September, but new auto prices fell for the second month in a row,
according to the Labor Department report.
The Consumer Price Index rose 0.3 percent in October, matching analyst
expectations and posting the biggest gain since January.
The gasoline index jumped three percent compared to September and prices
for electricity gained 1.7 percent, offsetting falling prices for food and
natural gas services.
Compared to October of last year, the index rose 2.5 percent, up from the
2.3 percent annual gain recorded in September.
But when erratic food and fuel prices are stripped out, the “core” CPI
rose by a slower 0.2 percent over September, also matching analyst
expectations.
And over the last 12 months, the core index slowed to 2.1 percent, down a
tenth from September’s reading.
This was despite a record 4.9 percent annual gain in the cost of
appliances, spurred higher by a 9.9 percent increase in the cost of washing
machines, which are subject to President Donald Trump’s steep import duties.
– Calming inflation fears –
The slower year-on-year gain in the core CPI could calm Wall Street fears
that the Federal Reserve will be more aggressive about raising interest
rates.
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With unemployment near a 50-year low and job creation continuing unabated,
the Fed has projected four more rate increases before the end of 2019.
Prices for used cars and trucks rose 2.6 percent and the cost of shelter
also grew, offsetting decreases for clothing and new cars.
Ian Shepherdson of Pantheon Macroeconomics said the data remained “calm,
with no real evidence of broad-based pressures in either direction.”
And Chris Low of FTN Financial said the data defy the more pessimistic
forecasts, including from the former chairman of the Federal Reserve.
“We keep hearing inflation is upon us, the latest in this Alan Greenspan
interview, in which he claims, ‘we are moving into the very early stages of
inflation acceleration.’ And yet, the actual inflation news keeps surprising
to the downside,” Low said.
In a separate report on Wednesday, the Labor Department also said worker
pay failed to keep pace with inflation in October, rising by a tenth of a
percentage point less than CPI — resulting in a net loss employee earnings
of 0.1 percent for the month.
Wall Street initially rallied on the CPI news but soon lost momentum and
closed lower on a host of other worries, including downgrades of tech giant
Apple and a changing regulatory environment for banks.
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