A big drop in energy prices helped pull overall US consumer prices down steeply in September and construction on new homes unexpectedly rebounded, the government reported today. The data sparked hopes that the US economy might not be slowing as rapidly as thought.
The Labor Department said overall US consumer prices fell 0.5% in September though core prices, which exclude food and energy, kept edging up enough to keep inflation a concern just days ahead of the Federal Reserve's next policy-setting meeting.
The 0.5% plunge in overall consumer prices was larger than the 0.3% decline that had been forecast and followed a 0.2% rise in August. It was the first decline since last December in prices and the largest for any month since November, when they dropped 0.7%.
Energy prices tumbled 7.2% in September, their biggest decline since an 8.1% drop last November, following a 0.3% rise in August.
Separately, the Commerce Department said housing starts hit an annual pace of 1.772 million units in September, compared with an upwardly revised 1.674 million pace in August.
The Labor Department's core consumer price index, an inflation gauge that strips out volatile food and energy costs, rose 0.2% in September, in line with Wall Street economists' expectations. It also matched the core price gains in August and July.
The new data comes ahead of the October 24-25 gathering of the Federal Open Market Committee to consider interest-rate policy. In recent speeches, US central bank officials have made it clear that they are closely monitoring inflation risks, and as a result market expectations are that interest rates will be held steady next week.
Meanwhile, US economists had forecast September housing starts would instead edge down to 1.64 million units from the originally reported August pace of 1.665 million.
