WASHINGTON — U.S. consumer prices rose 0.5 per cent in September, the largest increase in eight months. The result reflects another big jump in energy prices in the aftermath of Hurricane Harvey, which shut Gulf Coast refineries and caused gasoline prices to spike around the country.
The September increase in the closely watched consumer price index was the biggest one-month gain since a 0.6 per cent rise in January, the Labor Department reported Friday.
Energy prices shot up 6.1 per cent, led by a 13.1 per cent surge in gasoline. Analysts believe the impact of the hurricane will be temporary.
Core inflation, which excludes volatile food and energy, rose a tiny 0.1 per cent in September.
Over the past year, overall prices are up 2.2 per cent, while core inflation has risen 1.7 per cent.
The changes in inflation from the third quarter this year compared to the third quarter a year ago will result in a cost-of-living adjustment of 2 per cent next year for more than 70 million recipients of Social Security and other government benefits. It is the biggest annual increase since a 3.6 per cent rise in 2012.
So far this year, inflation by a measure preferred by the Federal Reserve has been falling farther from the Fed's target of 2 per cent annual price gains. In the latest month, the annual increase was just 1.4 per cent.
The Fed has been perplexed by the slowdown in inflation this year, first believing it was caused by temporary factors. But now Federal Reserve Chair Janet Yellen and other Fed officials have expressed concerns that something more fundamental may be at work.
The Fed has raised its benchmark lending rate twice this year. At its September meeting, it signalled that a third hike was still expected. Many analysts believe the Fed will raise rates again in December. But some think that a rate hike will not occur unless inflation shows signs of moving higher, beyond storm-related factors.
Martin Crutsinger, The Associated Press