U.S. Consumer Prices Rose a Steady 0.3%
WASHINGTON—U.S. consumer prices increased steadily in September, a sign of slowly building inflation that could
nudge the Federal Reserve closer toward raising interest rates.
The consumer-price index, measuring what Americans pay for everything from dental care to cars, rose 0.3% from a month
earlier, the Labor Department said Tuesday. Excluding the volatile costs of food and energy, so-called core prices
Overall prices have risen 1.5% over the past year, a sluggish pace historically but still the biggest gain in any 12-
month period since October 2014, driven largely by rent and health care cost increases. Core prices rose 2.2% over the
"We are just beginning to see the first whiffs of upward pressure in prices as labor and product markets tighten,"
economist Stephen Stanley of Amherst Pierpont said in a note to clients.
The government will use data from Tuesday's report to determine how much to increase federal benefits for millions of
Americans who receive Social Security checks. Benefits will rise 0.3% next year, under an annual cost-of-living
adjustment that is tied to how much certain prices grew in July through September, the Social Security Administration
Consumer prices have grown in six of the past seven months. Higher oil prices are driving the latest growth. Energy
prices climbed 2.9% since August--driven by higher gasoline costs--but were still down by 2.9% compared with a year
Food prices were flat from August and fell 0.3% from a year earlier.
The data is likely to reassure the Fed that the economy remains stable and inflation is picking up from historically
weak levels. The Fed has set a long-term goal of 2% annual price growth-as measured by a separate gauge, the price index
for personal-consumption expenditures, produced by the Commerce Department-as it tries to steer the economy toward
healthy growth that won't lead to crippling inflation.
That price-growth index shows overall prices rose 1% in the year through August while core prices climbed 1.7%.
Inflation has remained below the Fed's target for more than four years, but a range of indexes suggest some momentum
The Fed is expected to hold off on raising interest rates at its policy meeting in early November, but has indicated
it could raise rates slightly in December.
Separately Tuesday, data showed that workers' earnings grew sluggishly last month. Americans' average weekly earnings,
after accounting for inflation, grew 0.2% in September from a month earlier. Their inflation-adjusted hourly earnings
fell, but the hours that they worked—the average workweek—increased.
Write to Josh Mitchell at email@example.com
(END) Dow Jones Newswires
Copyright (c) 2016 Dow Jones & Company, Inc.