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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Gasoline prices dropped 9 percent last month after falling 4.1 percent in August. PCE prices in August were up just 0.3 per cent from a year ago, and core PCE rose 1.3 per cent.
Laura Rosner, economist at BNP Paribas, noted that services prices, excluding energy services, rebounded 0.3% last month.
A benign inflation environment is one of the obstacles confronting Federal Reserve officials who are contemplating raising rates for the first time in almost a decade.
The CPI reading was affected by the low number of working days in September because of the incidence of the Jewish holidays.
But private job growth has slowed to a three-year low, while higher minimum wages could spur businesses to trim jobs or limit hours for low-wage workers.
USA wholesale prices fell a seasonally adjusted 0.5% in September. Applications last touched that level in July, but before that hadn’t been so low since November 1973. Over the past 12 months the main CPI has shown zero increase in unadjusted terms.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,250 to 265,000 last week, the lowest level since December 1973. Energy prices fell 3.3 percent in August. Expensive food and accommodation could hurt consumer spending, even with cheaper gasoline. Airline fares also declined in the month.
Weak jobs report? Yup. “There are worries that inflation may not pick up that much in 2016, and this report goes that way”.
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A research note from Goldman Sachs said booming service prices, together with the easing of industrial product prices, suggests that policymakers are successfully transferring the economic growth pattern away from investment and toward consumption.
