Picture: ISTOCK
Picture: ISTOCK

Washington — US consumer prices recorded their biggest increase in eight months in September as petrol prices soared in the wake of hurricane-related production disruptions at oil refineries in the Gulf Coast area, but underlying inflation remained muted.

The US labour department said on Friday that its Consumer Price Index (CPI) jumped 0.5% last month after advancing 0.4% in August. September’s increase was the biggest since January and pushed up the year-on-year gain in the CPI to 2.2% from 1.9% in August.

Economists polled by Reuters had forecast the CPI surging 0.6% in September and accelerating 2.3% year on year. Petrol prices surged 13.1% last month, accounting for 75% of the increase in the CPI.

The increase was the largest since June 2009 and followed a 6.3% advance in August. The labour department said Hurricane Harvey was reported to have impacted refinery capacity in the Gulf Coast, and that Hurricane Irma, which struck Florida in early September, had a small impact on data collection.

Away from petrol, price pressures were benign. Excluding the volatile food and energy components, consumer prices gained 0.1% in September as the increase in rental accommodation slowed and the cost of new motor vehicles and the medical care index declined. The so-called core CPI rose 0.2% in August.

In the 12 months to the end of September, the core CPI increased 1.7%. The year-on-year core CPI has now increased by the same margin for five consecutive months.

The persistent modest readings in the core CPI are likely to worry US Federal Reserve officials who have been engaged in a vigorous debate on the inflation path. Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, has consistently undershot the US central bank’s 2% target for more than five years.

Fed chairperson Janet Yellen has said that temporary factors, such as once-off price cuts by mobile phone companies, are holding back inflation.

Minutes of the Fed’s September meeting, published on Wednesday, showed "many participants expressed concern that the low inflation readings this year might reflect not only transitory factors, but also the influence of developments that could prove more persistent". Last month, food prices rose 0.1% after a similar gain in August. The cost of rental accommodation rose 0.2% after surging 0.4% in August.

Owners’ equivalent rent of primary residence rose 0.2% after advancing 0.3% in August. Prices for new motor vehicles fell 0.4% as manufacturers resort to deep discounting to eliminate an inventory overhang.

There were also decreases in the cost of medical care, apparel, and household furnishings. But the cost of mobile phone services rose 0.4% after 14 straight months of declines.


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