Consumer Prices Accelerated for the Second Straight Month, Led by Energy Costs

The Bureau of Labor Statistics said that consumer prices rose by 0.5 percent in September, extending the 0.4 percent gain seen in August and rising at the fastest monthly rate since January. The uptick over the past two months has come primarily from higher energy costs, up 2.8 percent and 6.1 percent in August and September, respectively. Gasoline prices led the increases, increasing 6.3 percent and 13.1 percent in those months, with recent hurricanes helping to accelerate those costs. At the same time, food prices edged up 0.1 percent, primarily from food purchased away from home. Since September 2016, food and energy costs have increased 1.2 percent and 10.1 percent, respectively.

Overall, the consumer price index (CPI) increased 2.2 percent year-over-year in September, up from 1.9 percent in August and a five-month high. Pricing pressures had picked up earlier in the year but had waned over the summer months. As noted above, the pickup in inflation has mostly come from the uptick in energy costs. Core consumer prices, which exclude food and energy costs, inched up 0.1 percent in September, or 1.7 percent year-over-year. As such, overall pricing pressures remain modest—even with the recent pickup—and mostly under control for now. Nonetheless, the Federal Open Market Committee is still likely to raise short-term interest rates at its December 12–13 meeting, mostly on improvements in the macroeconomy and from general tightening in labor markets.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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