Consumer prices in the U.S. remained in check during September, increasing just 0.1%, according to the U.S. Labor Department.
The slight rise in the Consumer Price Index, which measures how much Americans pay for everything, follows a 0.2% decline in August.
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Compared to September 2013, the index last month is 1.7% higher, which is below the Federal Reserve’s inflation target.
When volatile food and energy prices are stripped out, the CPI rose 0.1% in September. This measure was unchanged from August and is up 1.7% over the past year.
The CPI figures show lagging inflation levels that have Fed policymakers concerned. That should keep interest rates low for a longer period of time, according to Chief Market Strategist James Chen at the financial traders City Index. “After the data was released, the U.S. dollar advanced significantly against other major currency pairs including the euro, pound, and yen.”
The overall small hike in September consumer prices was due in part to a 0.3% increase in food prices, following similarly sized gains in August and July, while energy prices fell 0.7%, the third consecutive monthly decline, according to Sterne Agee Chief Economist Lindsey Piegza.
“With international turmoil, a strong dollar, and lingering weakness in the consumer sector as a result of minimal wage pressures, inflation is taking a backseat,” she said. “Hawks issued a rallying cry at the start of the year warning Federal Reserve officials to act before inflation was out of control. Now, however, it appears the more pressing issue is a disinflationary trend pushing the headline further from the Fed's 2% target.”
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