US Inflation Rate at Nearly 2-Year High in September

Consumer prices in the United States went up 1.5 percent year-on-year in September of 2016, higher than 1.1 percent in August and in line with market expectations. It is the highest inflation rate since October of 2014 boosted by robust gains in shelter and a smaller drop in energy prices while food cost fell for the first time in more than six years.

Year-on-year, prices of services less energy increased 3.2 percent, the same as in August: inflation was steady for shelter (3.4 percent) and eased for transportation services (3 percent from 3.1 percent) and medical care (4.8 percent from 5.1 percent). 

Food prices fell 0.3 percent after being flat in August, marking the first decline since February of 2010. In contrast, energy cost fell at a much slower 2.9 percent (-9.2 percent in August)

Annual core inflation which excludes food and energy eased to 2.2 percent from 2.3 percent in the previous month and below market expectations of 2.3 percent.  

On a monthly basis, consumer prices rose 0.3 percent after a 0.2 percent gain in August and also in line with market expectations. Increases in the shelter (+0.4 percent) and gasoline (+5.8 percent) indexes registered main upward pressures: gasoline cost accounted for more than half of the all items increase and the shelter index posted the largest gain since May. The energy index increased 2.9 percent, its largest advance since April. In contrast, the index for food was unchanged for the third consecutive month, as the food at home index continued to decline (-0.1 percent).

The core index edged up 0.1 percent, slowing from a 0.3 percent rise in August.  Along with shelter, prices for medical care, motor vehicle insurance, personal care, education, alcoholic beverages, airline fares, and tobacco all increased in September. In contrast, the indexes for communication, apparel, used cars and trucks, recreation, and new vehicles declined. 

US Inflation Rate at Nearly 2-Year High in September

BLS | Joana Taborda |
10/18/2016 12:57:37 PM