The consumer price index rose 0.6 percent in September, according to the Bureau of Labor Statistics. This matched the increase in August. Higher energy costs were the main contributor to the gains, with consumer energy prices up 5.6 percent and 4.5 percent for the past two months. Gasoline prices in September rose 7 percent, as we have seen a pickup in petroleum costs recently from the easing experienced earlier in the year.
Food prices rose 0.1 percent for the month. Higher nonalcoholic beverages prices (up 0.9 percent) were offset by declines in meat, poultry, fish and eggs (down 0.6 percent) and fruits and vegetables (down 0.4 percent). The food categories that were down represent some easing from prior months. Year-over-year food prices were up a modest 1.6 percent.
Excluding food and energy prices, core inflation from September 2011 to September 2012 was 2.0 percent. This is in-line with Federal Reserve Board targets, suggesting that pricing pressures are currently under control.
Note that the producer price index for September noted some higher food and energy costs at the intermediate and crude levels that will be forthcoming in future months. Even with these expected increases, inflation is expected to remain modest. If not, I would anticipate that the Federal Reserve Board might need to readjust. For the time being, though, they are more worried about slowing global and U.S. economic growth than they are about inflationary pressures.
Chad Moutray is chief economist, National Association of Manufacturers.