Consumers Paid More for Food, Gas in September
WASHINGTON — Consumers paid more for food and gas last month, although inflation outside those volatile categories was tame.
The Labor Department says the Consumer Price Index rose 0.3 percent in September, below a 0.4 percent rise in August. Excluding food and energy, so-called core prices increased 0.1 percent, the smallest rise since March.
Inflation has worsened this year, after the cost of oil, grains and other commodities spiked in the spring. But economists expect price increases to moderate as weak growth lowers commodity prices.
Food prices rose 0.4 percent, pushed up by big increases in the dairy, cereals, and fruits and vegetables categories. Gas prices rose 2.9 percent, driving up energy costs 2 percent. Clothing prices fell sharply.
A surge in gas prices drove wholesale costs up 0.8 percent in September, the government said Tuesday. Economists cautioned that the increase largely reflected one-time factors and broader inflation is likely to be modest.
Core wholesale prices rose only 0.2 percent.
A small amount of inflation is good for the economy. It encourages businesses and consumers to spend and invest money sooner rather than later, before inflation erodes its value.
But Americans are facing higher food and gas prices at a difficult time. Unemployment has been roughly 9 percent for more than two years. Hiring is slow and few people are seeing much in the way of raises. Steeper prices for basic necessities have forced many to cut back on more discretionary purchases. That has slowed overall growth.
The annual increase means that 55 million Social Security beneficiaries will receive higher benefits next year, the first cost-of-living adjustment since 2009. Inflation has been so low in the past two years that Social Security checks, which are tied to the CPI, haven't changed.
The core index has reached the top of the Federal Reserve's informal inflation target of between 1.5 percent and 2 percent. But Fed policymakers also expect inflation to moderate in the coming months. Last month, Fed policymakers said that inflation would decline to levels "at or below" the target, according to minutes released last week.