Financial News: U.S. Core Consumer Prices Rise More Than Expected

U.S. Core Consumer Prices Rise More Than Expected In September

(RTTNews) - While the Labor Department released a report on Wednesday showing consumer prices in the U.S. grew in line with estimates in the month of September, the report also showed a bigger than expected increase in core consumer prices, which exclude food and energy prices.

The report said consumer prices climbed by 0.6 percent in September after rising by 0.4 percent in August. The increase in prices matched economist estimates.

The Labor Department also said the annual rate of consumer price growth jumped to 3.7 percent in September from 3.4 percent in August, which was also in line with expectations.

On a monthly basis, consumer prices increased at the fastest rate since April due in large part to a surge in energy prices.

The report said energy prices shot up by 5.2 percent in September, with the Labor Department noting a 9.1 percent spike in gasoline prices accounted for over half of the monthly all items increase.

Meanwhile, the report said core consumer prices, which exclude food and energy prices, rose by 0.3 percent for the second straight month. Economists had expected core prices to edge up by 0.2 percent.

The annual rate of core consumer price growth also accelerated to 2.6 percent in September from 2.4 percent in August, coming in slightly above economist estimates for 2.5 percent growth.

The monthly increase in core prices reflected higher prices for shelter, recreation, used cars and trucks, education, airline fares, medical care and apparel.

"September core inflation was hotter than expected and this has reinforced the view that the Federal Reserve has more work to do to contain price pressures," said ING Chief International Economist James Knightley.

He added, "The risks are skewed towards further policy tightening than we are expecting, but with wage growth looking so benign and the housing market in a weak state, the scope for an eventual reversal is high."

On Thursday, the Labor Department is scheduled to release a separate report on producer price inflation in the month of September.

Economists currently expect producer prices to climb by 0.5 percent in September after rising by 0.4 percent in August, while the annual rate of growth is expected to hold steady at 5.4 percent.

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