Cheaper gasoline pushes United States consumer prices lower

Producer prices fell more than expected in September. Core inflation, which excludes food and energy, rose a modest 0.2 percent in September from the previous month.

Consumer prices fell for the second straight month in September as cheap gasoline more than offset a higher grocery bill. In addition to lower oil prices, price pressures also are being suppressed by a strong dollar, which has gained 17.2 percent against the currencies of the United States’ main trading partners since June 2014, and weak global demand.

“The inflation backdrop remains very benign”, said Thomas Costerg, a senior USA economist at Standard Chartered Bank in New York, who correctly forecast the decline in wholesale prices.

The so-called core CPI, which strips out food and energy costs, rose 0.2 percent after ticking up 0.1 percent in August. Core prices were up 0.5 per cent. The Fed wants price increases closer to its 2 per cent target before lifting rates, potentially as soon as its meeting this month.

Steve Murphy, US Economist at Capital Economics, said, “Overall, there is nothing in this report that would persuade Fed officials to hike interest rates before the end of this year”. But the USA central bank held off amid concerns about China’s economy growing at a slower pace and volatility in the US stock market.

In September, producer prices for goods were down 1.2 per cent, the sharpest fall since January. According to the Federal Reserve’s preferred measure, they increased just 0.3 per cent in August from a year earlier.

The volatile trade services component, which mostly reflects profit margins at retailers and wholesalers, fell 0.4 percent in September after rising 0.9 percent in August.