Consumer prices up in September on gasoline

Consumer prices rose in September as the cost of gasoline surged, posing a threat to consumers' spending power although faster inflation looked unlikely to derail the Federal Reserve's ultra-easy policy path.

KEY POINTS: The Consumer Price Index increased 0.6 percent last month, in line with analysts' expectations and matching August's reading, data from the Labor Department showed on Tuesday.

Gasoline prices jumped 7 percent in September after climbing 9 percent the prior month. Higher costs at the pump force many American consumers to cut back on other spending.

COMMENTS:

PETER JANKOVSKIS, CO-CHIEF INVESTMENT OFFICER AT OAKBROOK INVESTMENTS LLC IN LISLE, ILLINOIS:

"Basically, people will be reassured the Fed can continue with QE3 for the foreseeable future, no inflation concerns on the horizon at the moment. I wouldn't have expected (a move on futures), it was pretty much in-line, nothing too exciting and still pretty low."

JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDE MARKETS, WOODCLIFF LAKE, NEW JERSEY:

"Core inflation was low and unthreatening, but in truth neither matters to a Fed monetary policy committed to lowering unemployment."

ADAM SARHAN, CHIEF EXECUTIVE OF SARHAN CAPITAL IN NEW YORK:

"This confirms that inflation remains in check, which takes pressure off the Fed to raise rates. So far the market reaction is positive."

MARKET REACTION:

STOCKS: U.S. stock index futures held gains

BONDS: U.S. bond prices fell and yields rose

FOREX: The dollar was little changed against the euro and yen

(Americas Economics and Markets Desk; +1-646 223-6300)