Core US consumer prices rose by an expected 0.2% in September, but a year-on-year inflation index remained close to an 11-year high in a sign of persistent inflation risk, a government report shows today. Consumer spending and personal income also rose in the month.
The year-on-year rate of non-food, non-energy inflation registered a strong 2.4% increase in September. However, it eased from a 2.5% gain in August, which was the biggest climb since April 1995.
Analysts had been forecasting a 0.2% increase in the index for core personal consumption expenditures for September after the August figure came in at a 0.3% increase.
Just as the inflation figures were released today, Federal Reserve Bank of Richmond President Jeffrey Lacker said that core inflation was running at an unacceptable rate on a long-term basis. Historically, the Fed's comfort level for annual core inflation has been in the 1 to 2% range.
The lone dissenter in recent Fed decisions to hold rates steady, Lacker said the inflation outlook was 'discomforting'. 'The economy is resilient enough right now to withstand further tightening,' despite the slowdown in the housing market, Lacker said.
Overall inflation, as measured by a price index for consumer spending that includes food and energy, fell 0.3% in September after a 0.3% jump in August - the drop was largely attributed to falling petrol prices.
Inflation-adjusted spending rose by 0.4% after a surprise fall of 0.1% in August. Analysts were expecting a 0.2% gain in this measure for September.
Personal income rose by 0.5% in September, ahead of analysts' forecasts of a 0.3% gain after it rose by an upwardly revised 0.4% in August. Wages and salaries increased 0.5% after a 0.2% rise in August.
The personal saving rate as a percentage of disposable personal income improved to a negative 0.2% from a negative 0.5% the month before, but it was still the 18th consecutive negative reading in that category.
