Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



More Expensive Gas Pushes U.S. Consumer Prices Up

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

WASHINGTON (AP) --€” Higher gas costs drove up U.S. consumer prices in September for the second straight month. Outside energy, there was little sign of inflation.

The Labor Department said Tuesday that the consumer price index rose a seasonally adjusted 0.6 percent last month, matching the August increase. In the past 12 months, prices have increased 2 percent. That's in line with the Federal Reserve's inflation target.

Excluding volatile food and energy costs, prices rose just 0.1 percent. In the past year, so-called core prices have increased 2 percent.

"Pump prices are fueling headline inflation, but underlying ... trends remain benign," Robert Kavcic, an economist at BMO Capital Markets, said in a note to clients.

Modest inflation leaves consumers with more money to spend, which can boost growth. Low inflation also allows the Federal Reserve to continue with its efforts to rekindle the economy. If the Fed were worried that prices are rising too fast, it might have to raise interest rates.

Food prices rose only 0.1 percent. The cost of meat, chicken, and eggs fell. Dairy prices rose.

Gas prices rose sharply over the summer and into September, but have since come down. The average price for a gallon of gas nationwide was $3.77 on Tuesday, about 9 cents below last month's level.

Tuesday's report noted that gas prices rose a seasonally adjusted 7 percent in September, below August's 9 percent increase.

Paul Ashworth, an economist at Capital Economics, said that with gas prices leveling off, overall inflation should stabilize at around 2 percent for the next several months and then decline.

The summer's drought in the Midwest could ultimately affect grocery prices. The drought caused spikes in the cost of corn, soybeans, and other grains.

Those grains are used in animal feed, which pushes up the price of chicken, beef, and pork. And corn is also used in most products found throughout the supermarket, from cereals to soft drinks to cosmetics.

Kavcic said that stiff competition among grocery stores will likely limit any future food price increases.

The cost of rent, clothing and airline tickets rose last month, pushing up core prices. Those increases were partly offset by a 1.4 percent drop in used car and truck prices, the steepest drop since February 2009. New car prices and the cost of furniture also fell.

The economy remains the top issues for voters with just three weeks left before Election Day. It will be front and center Tuesday night when President Barack Obama and GOP challenger meet at New York's Hofstra University for the second of three debates.

A batch of recent data suggests consumers are gaining confidence in the economy.

Consumer sentiment rose to a five-year high in October, according to a survey by the University of Michigan. And Americans stepping up their spending at retail businesses in September for the second straight month, buying more cars and iPhones.

The job market is also looking a little better. The unemployment rate fell to 7.8 percent last month, the first time the rate has been below 8 percent since January 2009. And employers added an average of 146,000 jobs per month in the July September quarter --€” double the average number created during the April-June quarter.

Still, job growth remains too weak to rapidly bring relief to the more than 12 million Americans who are unemployed.

Last month, the Federal Reserve said it would try and stimulate the economy with a pair of bold steps. It is purchasing mortgage bonds to try and lower long-term interest rates and make home-buying more affordable. And it plans to keep short-term interest rates low even after the economy accelerates.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2059215, ~/Articles/ArticleHandler.aspx, 5/31/2016 12:26:04 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 17,782.13 -91.09 -0.51%
S&P 500 2,093.87 -5.19 -0.25%
NASD 4,934.72 1.22 0.02%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes