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Highlights
Once again, higher gasoline prices were behind a jump in headline CPI inflation. The consumer price index in September increased 0.6 percent, following a 0.6 percent surge the month before. Market expectations were for a 0.5 percent gain.
Excluding food and energy, the CPI rose a mild 0.1 percent after edging up 0.1 percent in August. Analysts projected a 0.2 percent rise.
By major components, energy jumped a monthly 4.5 percent after increasing 5.6 percent in August. Gasoline increased 7.0 percent in September, following a monthly surge of 9.0 percent the month before. Food prices eased to a 0.1 percent gain after rising 0.2 percent in August. The meats, poultry, fish & eggs index dipped notably.
Within the core, indexes for shelter, medical care, apparel, and airline fares were among those that increased, while the indexes for used cars and trucks, new vehicles, personal care, and household furnishings and operations all declined.
More specifically, new vehicles eased 0.1 percent in September while used vehicles declined 1.4 percent. Shelter inflation costs were a little on the warm side relative to heavy weakness during the past recession. Shelter inflation rose 0.2 percent after a 0.2 percent increase in August.
Year-on-year, overall CPI inflation posted at 2.0 percent in September, up from 1.7 percent the month before (seasonally adjusted). The core rate firmed to 2.0 percent from 1.9 percent in August on a year-ago basis. On an unadjusted year-ago basis, the headline CPI was up 2.0 percent, versus 1.7 percent in August. The core was up 2.0 percent compared to 1.9 percent in August, not seasonally adjusted.
Inflation had a number of cross currents in September. Energy was up but may be easing a little in October. Food was soft but could be due to increased supply of meats dependent on high grain costs as ranchers cut herds. The core was lower primarily due to soft vehicle inflation but those numbers are volatile monthly. However, shelter costs have been rising as the housing market has improved. Overall, the direction of underlying is difficult to pinpoint. Headline likely is easing but core is likely rising after discounting volatile prices for vehicles.
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Market Consensus before announcement
The consumer price index in August jumped 0.6 percent, following no change the prior month. Excluding food and energy, the CPI gained a more modest 0.1 percent, matching a 0.1 percent rise in July. By major components, energy jumped a monthly 5.6 percent after declining 0.3 percent in July. Gasoline on a seasonally adjusted basis jumped 9.0 percent, following a 0.3 percent increase the prior month. Food prices rose 0.2 percent after edging up 0.1 percent in July.
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