Published: Sat, October 14, 2017
Money | By Armando Alvarado

Consumer Prices Accelerated in September

Consumer Prices Accelerated in September

United States headline inflation increased less than expected last month but core prices jumped well above forecasts, according to data released by the Bureau of Labor Statistics on Friday.

USA retail sales recorded their biggest increase in 2-1/2 years in September as demand rose for building materials and motor vehicles in areas hurt by hurricanes.

Month-on-month, the HICP remained unchanged in September.

Core prices, which exclude food and energy and are more closely watched by economists and the Federal Reserve, rose by a disappointing 0.1% on the month, short of August's 0.2% increase that was predicted to repeat for a second month. Over the past 12 months, food prices are up 1.2%.

Spot gold was up 0.5 percent at $1,300.40 an ounce at 1302 GMT after $1,302.40, the highest since September 26. The energy index rose 10.1% in the last twelve months. The pan-European STOXX600 rose 0.3 percent and was set for its fifth straight week of gains as were world stocks.

The dollar steadied in early Asian trading on Friday, on track for weekly losses as investors awaited the US inflation data to gauge the likelihood that the Federal Reserve will stick to its plan to raise interest rates again this year.

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"Just when Janet Yellen had one finger on the trigger to raise rates in December, weaker inflation figures have reared their ugly head once again", said Alex Lydall, head of dealing at Foenix Partners.

"With growth and the domestic economy booming, wages recently increasing, Fed officials appeared hawkish running into year-end, and understandably so". Core prices had been expected to rise by another 0.2 percent.

The harmonized index of consumer prices, or HICP, also rose 1.8 percent year-on-year in September, same as in the previous month.

Beyond the hurricanes, improved economic growth around the globe has been putting upward cost pressures on commodities, including oil, and other goods.

"Many participants expressed concern that the low inflation readings this year might reflect not only transitory factors, but also the influence of developments that could prove more persistent", said the Minutes of the Fed's September 19-20 meeting published on Wednesday.

The increase in consumer prices was largely due to a jump in energy prices, which soared by 6.1 percent in September after jumping by 2.8 percent in August. That inflation gauge has undershot the target for all but two months since early 2012. But that hasn't fully translated directly into higher US consumer prices, in part because technology is allowing Americans to find lower-cost products and wage pressures remain largely in check. Prices for drugs, cars and clothing fell last month. Average weekly earnings, adjusted for inflation, fell 0.1% in September from a month earlier.

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