U.S. CPI Unchanged in September

The cost of living in the U.S. was unchanged in September, restrained by plunging fuel costs and decreases in automobile prices and airline fares that signal the slowing economy is starting to cool inflation.

No change in prices, followed a 0.1 percent drop the prior month, the Labor Department said today in Washington. So-called core prices, which exclude food and energy, rose 0.1 percent, also less than forecast.

Less inflation gives Federal Reserve Chairman Ben S. Bernanke scope to lower interest rates further as policy makers attempt to unfreeze credit markets. Some companies are cutting prices to entice cash-strapped consumers who are limiting purchases to essential items such as food and fuel.

Prices increased 4.9 percent in the 12 months to September after a year-over-year gain of 5.4 percent in August. The core rate increased 2.5 percent from September 2007, the same as the year-over-year increase in the prior month.

Energy expenses dropped 1.9 percent, led by the biggest decrease in the cost of natural gas on record. Gasoline prices fell 0.6 percent.

Oil prices have kept coming down this month. Crude oil futures on the New York Mercantile Exchange dipped below $75 a barrel yesterday after averaging $103.76 in September.

Prices paid to U.S. producers fell for a second month in September, the first back-to-back drop in two years, the government said yesterday. Import costs last month decreased by the most since April 2003, Labor figures showed last week.

Food prices, which account for about a fifth of the CPI, rose 0.6 percent for a second month.

New-vehicle prices dropped 0.7 percent, the most since August 2005, and air fares fell 1.7 percent, the biggest decline since November 2006.

Companies are offering discounts to revive slumping retail sales, which the Commerce Department said yesterday dropped in September by the most in three years.

U.S. CPI Unchanged in September

TradingEconomics.com, Bloomberg.com
10/16/2008 5:51:34 AM