U.S. Consumer Prices Trail Forecasts as Used-Car Costs Drop




U.S. Consumer Prices Trail Forecasts as Used-Car Costs Drop


(Bloomberg) -- A key measure of U.S. consumer prices rose by less than expected in September as used-car costs fell by the most in a year, potentially bolstering the case for the Federal Reserve to cut interest rates for the third time in three months.

The core consumer price index, which excludes food and energy, increased 0.1% from the prior month, a Labor Department report showed Thursday, below the median estimate of economists. The annual gain of 2.4% matched projections as well as the August increase. The broader CPI was unchanged on the month and up 1.7% annually, trailing projections.

The subdued monthly reading could reinforce investor bets that the Fed will ease policy later in October as the global picture darkens and the trade war worsens. Officials favoring a reduction may see little risk that inflation will jump above the central bank’s price goal and a danger that trade tensions will persist for some time.

Even so, additional tariffs could still pass through to prices paid by consumers. On Sept. 1 President Donald Trump initiated fees on about $112 billion in Chinese products and the Asian nation immediately retaliated. Chinese and American negotiators are holding face-to-face talks in Washington this week, with levies set to rise further barring any truce.

A separate Labor Department report Thursday showed filings for unemployment benefits fell to a three-week low of 210,000, indicating that while job gains are slowing, layoffs and firings remain limited.

10-Year Treasury yields climbed to the day’s highs after the data, and as traders prepared for a 30-year bond auction later Thursday.

Vehicle Prices

The weaker-than-expected CPI figures reflected a 1.6% monthly drop in used-car prices, while new vehicle costs fell 0.1% for the third straight decline. Apparel prices decreased 0.4%, the first drop since April.

Other categories were firmer. Shelter, which makes up about a third of total CPI, rose 0.3% in September following a 0.2% gain. Owners-equivalent rent, one of the categories that tracks rental prices, increased 0.3%.

The Labor Department’s CPI gauge tends to run faster than the Commerce Department’s personal consumption expenditures price index, the measure officially targeted by the Fed for 2% inflation. Policy makers look to the core PCE index for a better read on underlying price trends. That measure has shown signs of firming, increasing 1.8% annually in August, the most since January.

On the CPI, energy prices fell 1.4% in September, the fourth drop in five months, as gasoline declined 2.4%. Food was up 0.1%, the first increase in four months.

Prices for medical care rose 0.2%, the least since February, though components were mixed: physicians’ services costs increased, hospital services were unchanged and prescription drugs fell 0.5%.

Health insurance prices rose 1.4% in September. In the prior month, the index for such costs surged by a record 1.9%, though it’s not directly based on prices paid by consumers; instead, it’s an indirect measure based on retained earnings, or what insurers have after paying out claims.

Get More

A separate Labor Department report Thursday showed average hourly earnings, adjusted for price changes, rose 1.2% in September from a year earlier, following 1.4% in August, as nominal wage gains cooled. An unofficial Social Security cost-of-living adjustment, based on Labor Department data, was 1.6%. That’s based on the annual change in a third-quarter measure of consumer prices. Economists surveyed by Bloomberg had forecast the core gauge would rise 0.2% from the prior month and 2.4% from a year earlier, with the broader index seen rising 0.1% monthly and 1.8% on a yearly basis.





Related News

Forex- Pound Under Pressure as Speaker Rules out a Second Brexit Bill Vote
Today, 16:06
Investing.com - Sterling was under pressure on Monday after Speaker of the House of Commons John Bercow said there would be no vote on the latest Brexit deal as Prime Minister Boris Johnson had hoped. The deal was effected defeated over the weekend
Oil Prices Tumble Again on Oversupply Fears
Today, 16:03
Investing.com -- Crude oil prices tumbled again on Monday amid ongoing fears of looming oversupply in a world economy that is slowing sharply. By 10:12 AM ET (1412 GMT), U.S. West Texas Intermediate futures were quoted down 84 cents, or 1.6%, at
'Pierre Delecto' Mitt Romney admits Twitter alter ego
Today, 15:15
(Reuters) - Republican Senator Mitt Romney has admitted to using a secret Twitter account under the pseudonym "Pierre Delecto" to follow politicians, journalists and fan accounts for himself, Slate Magazine reported. Romney mentioned his use of the
Avast target of cyber-security attack, company and Czech counterintelligence say
Today, 15:12
PRAGUE (Reuters) - Czech-based Avast and Czech counterintelligence service BIS said on Monday they had detected a network attack on the cyber-security company which the BIS suspected of originating in China. Avast said in a blog post that it found
Supreme Court tosses challenge to Republican-drawn Michigan electoral maps
Today, 15:09
By Andrew Chung WASHINGTON (Reuters) - The U.S. Supreme Court on Monday threw out a challenge to Republican-drawn electoral districts in Michigan that Democrats said were illegally configured to dilute their voting power, an action taken in the



Latest News
Forex- Pound Under Pressure as Speaker Rules out a Second Brexit Bill Vote
21.10.2019 16:06
Investing.com - Sterling was under pressure on Monday after Speaker of the House of Commons John Bercow said there would be no vote on the latest Brexit deal as Prime Minister Boris Johnson had hoped. The deal was effected defeated over the weekend with the approval of an amendment and Bercow said voting on the matter on Monday would be
Read more
Oil Prices Tumble Again on Oversupply Fears
21.10.2019 16:03
Investing.com -- Crude oil prices tumbled again on Monday amid ongoing fears of looming oversupply in a world economy that is slowing sharply. By 10:12 AM ET (1412 GMT), U.S. West Texas Intermediate futures were quoted down 84 cents, or 1.6%, at $53.03 a barrel, while the international benchmark Brent was down 1.8% at $58.33 a barrel. Prices have
Read more
'Pierre Delecto' Mitt Romney admits Twitter alter ego
21.10.2019 15:15
(Reuters) - Republican Senator Mitt Romney has admitted to using a secret Twitter account under the pseudonym "Pierre Delecto" to follow politicians, journalists and fan accounts for himself, Slate Magazine reported. Romney mentioned his use of the secret account in a profile published in the Atlantic on Sunday, referring to himself as a "lurker"
Read more
Avast target of cyber-security attack, company and Czech counterintelligence say
21.10.2019 15:12
PRAGUE (Reuters) - Czech-based Avast and Czech counterintelligence service BIS said on Monday they had detected a network attack on the cyber-security company which the BIS suspected of originating in China. Avast said in a blog post that it found suspicious behavior on its network on Sept. 23 and opened an investigation involving the BIS and
Read more
Supreme Court tosses challenge to Republican-drawn Michigan electoral maps
21.10.2019 15:09
By Andrew Chung WASHINGTON (Reuters) - The U.S. Supreme Court on Monday threw out a challenge to Republican-drawn electoral districts in Michigan that Democrats said were illegally configured to dilute their voting power, an action taken in the aftermath of major rulings by the justices in June prohibiting federal courts from hearing such claims.
Read more