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.
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PETER BOOCKVAR, PORTFOLIO MANAGER, MILLER TABAK & CO, NEW YORK:
"An ever rising level in the cost of living is not price stability but the Fed only seems to focus on the rate of change. While the Fed's preferred inflation measure is the personal consumption expenditures or PCE now, the CPI reflects a sticky level of inflation in the context of mediocre economic growth. The current velocity of money, or lack thereof, is the only thing keeping it from jumping much higher right now."
RYAN DETRICK, SENIOR TECHNICAL STRATEGIST, SCHAEFFER'S INVESTMENT RESEARCH, CINCINNATI, OHIO:
"Most of the inflation data seems like it's been pretty well contained, even though there's been a lot of continued concerns regarding inflation issues. But when I look at the core, it's once again showing overall contained inflation. Even though we've got the higher oil prices out there, it doesn't seem like it's trickling over quite yet."
CARY LEAHEY, ECONOMIST AND SENIOR ADVISOR, DECISION ECONOMICS, NEW YORK:
"The CPI report was pretty much what the market was looking for with a large headline increase - same as in August - with the same culprit: a large increase in energy prices. What's particularly interesting is that the rise in gasoline prices has not made a major dent in consumer sentiment which has picked up noticeably in the last six weeks and people are buying lots of stuff ranging from back to school needs for their children as well as the new version of the IPhone.
"The good news from the core rate - up just 0.1 percent for the third month in a row - is that the Fed can confidently focus on propping up the economy because inflation is not a problem. If anything, the Fed is probably more worried about disinflation than inflation at this juncture."
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."
(Americas Economics and Markets Desk; +1-646 223-6300)