The consumer price index (CPI) – the basket of goods and services used to measure inflation – fell 0.2 per cent from August to September, its steepest decline in eight months.
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The drop was bigger than the 0.2% decline analysts had forecast and was also lower compared to the flat reading registered in the previous month.
Projections in the Bloomberg survey for producer prices ranged from a drop of 0.5 percent to a 0.2 percent gain.
Wholesale prices have decreased 1.1 per cent from a year ago, with September marking the eighth straight 12-month decline. Excluding the volatile food and energy categories, core prices tumbled 0.3 per cent in September. The index for final demand services edged down 0.4 percent.
Falling energy prices held inflation to a standstill in September, the Bureau of Labor Statistics reported Thursday morning.
“We see today’s report as indicating downside pressures on consumer prices, particularly through the consumer goods channel”. Officials have said they want to be “reasonably confident” inflation will move toward the Fed’s 2% target prior to liftoff.
“Claims continue to show no sign of an uptrend, reinforcing our view that the sudden slowing in payrolls in the last two months mainly reflects volatility rather than a fundamental change in the trend”, said Jim O’Sullivan, chief US economist at High Frequency Economics in Valhalla, New York.
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On the other hand, the report said food prices climbed 0.4% in September, reflecting the biggest increase since May of 2014. According to the Federal Reserve’s preferred measure, they increased just 0.3 per cent in August from a year earlier. About 60 percent of the index covers prices consumers pay for services from medical visits to airline fares, movie tickets and rents.
