U.S. Consumer Prices Increased in September on Rising Gasoline Costs

By Eric Morath and Ben Leubsdorf Features Dow Jones Newswires

U.S. consumer prices rose steadily for the second straight month in September, reflecting rising gasoline costs following hurricanes striking the southern U.S.

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The consumer-price index, measuring what Americans pay for everything from groceries to theater tickets, advanced 0.5% in September from a month earlier, the Labor Department said Friday. It was the largest monthly gain since January.

Much of the rise was due to a sharp rise in gasoline prices. Hurricane Harvey, which made landfall in late August, temporarily shut Texas refineries, and Hurricane Irma caused additional disruptions in Florida last month.

Prices for other items rose very modestly. Excluding volatile food and energy costs, so-called core prices increased 0.1%.

Economists surveyed by The Wall Street Journal expected a 0.6% gain in overall prices and a 0.2% increase in core prices.

From a year earlier, consumer prices rose 2.2%. Year-over-year prices have accelerated since June. But when excluding food and energy, prices rose 1.7% from a year earlier. Core prices have risen at that same annual rate since May.

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The data presents a mixed signal to Federal Reserve policy makers considering if the economy is ready for a third increase to the central bank's benchmark interest rate this year.

Some Fed officials have been waiting for signs of rising inflation--coupled with low unemployment and steady job growth--before raising interest rates again. At their September meeting, officials penciled in a rate increase later this year, but some policymakers have expressed concerns about persistently soft inflation.

The Fed targets a 2% annual inflation rate, as measured by the Commerce Department's personal-consumption expenditures price index. That inflation gauge has undershot the target for all but two months since early 2012.

Beyond the hurricanes, improved economic growth around the globe has been putting upward cost pressures on commodities, including oil, and other goods. But that hasn't fully translated directly into higher U.S. consumer prices, in part because technology is allowing Americans to find lower-cost products and wage pressures remain largely in check.

Friday's report showed gasoline prices rose 13.1% last month, the largest one-month increase since June 2009. Food prices increased 0.1%. Shelter prices advanced 0.3% over the month.

Prices for drugs, cars and clothing fell last month.

Data from Friday's report will be used to calculate next year's cost-of-living adjustment for the 66.7 million Americans who receive Social Security benefits. Based on the Labor Department data, it's expected that the Social Security Administration will announce a roughly 2.0% increase in monthly benefit payments next year.

Meanwhile, Americans' inflation-adjusted incomes slipped for the second straight month, the Labor Department said in a separate report Friday. Average weekly earnings, adjusted for inflation, fell 0.1% in September from a month earlier.

The Labor Department's report on consumer prices can be found at: http://www.bls.gov/news.release/pdf/cpi.pdf

Write to Eric Morath at eric.morath@wsj.com and Ben Leubsdorf at ben.leubsdorf@wsj.com.

(END) Dow Jones Newswires

October 13, 2017 08:45 ET (12:45 GMT)