U.S. Consumer Prices Rose 0.1% in September

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Customers use the checkout lines at an Aldi store in Tyler, Texas, in September.

Customers use the checkout lines at an Aldi store in Tyler, Texas, in September.


Photo:

Sarah A. Miller/Associated Press

WASHINGTON—U.S. consumer prices rose only slightly in September, a sign inflationary pressures remain in check as a strong dollar holds down import prices and energy costs dropped.

The consumer-price index, which measures what Americans pay for everything from hair spray to hotel room service, rose 0.1% in September after rising a seasonally adjusted 0.2% in August, the Labor Department said Thursday.

In a positive sign for American workers, modest prices increases caused the pace of inflation-adjusted earnings to rise at the strongest rate in six months.

Economists surveyed by The Wall Street Journal expected consumer prices to rise 0.2% in September, and core prices to rise 0.2% as well. Excluding the volatile food and energy categories, so-called core consumer prices rose 0.1%, the same pace as in August.

In the 12 months through September, overall prices rose 2.3%, the smallest year-over-year change since February. Core prices were up 2.2% on the year, the same rate as in August.

Economists expected a 2.4% increase in overall prices from a year earlier, and a 2.3% rise in core prices over the 12-month period.

A stronger dollar is likely keeping a lid on the prices of goods, many of which are either purchased overseas or compete with imports. Rising interest rates and faster economic growth in the U.S. compared with other developed economies have helped push the dollar higher in recent months. The WSJ Dollar Index, which measures the greenback against a basket of other currencies, rose about 5% from June to September.

Meanwhile wages rose in September, as workers reaped the benefits of a tight labor market combined with muted inflation. After adjusting for inflation, average hourly earnings rose a seasonally adjusted 0.3% in September and are up 0.5% from September 2017.

Thursday’s report showed an index of energy prices fell 0.5% in September, and gasoline costs dropped a seasonally adjusted 0.2% after rising 3% in August. The price index for used cars and trucks also declined considerably on the month, falling 3%. Food prices were flat.

The reading comes roughly two weeks after Federal Reserve policy makers raised their benchmark short-term interest rate to a range between 2% and 2.25%. Officials signaled they expected to lift the rate again later this year and through 2019 to keep a strong economy on an even keel.

The risk that inflation climbs higher and faster than anticipated could require the Fed to raise rates “a little bit quicker,” Fed Chairman Jerome Powell said at his Sept. 26 news conference. He added, “We don’t see that. We really don’t see that.”

“Inflation is low and stable,” he said.

Thursday’s report follows the Labor Department’s latest employment report, which showed average hourly earnings for private-sector workers rose 2.8% in September from a year earlier, a slight pullback from the 2.9% annual pace of wage growth in August – but still well above the 2.3% pace of year-over-year inflation.

On Wednesday, a gauge of U.S. business prices showed signs of bouncing back in September after a slowdown over the summer.

The producer-price index, a measure of the prices businesses receive for their goods and services, increased a seasonally adjusted 0.2% in September from a month earlier, the Labor Department said. The rise in September prices came after two months of sluggishness and was propelled by a hefty increase in transportation prices.

Write to Harriet Torry at harriet.torry@wsj.com and Eric Morath at eric.morath@wsj.com