2019.10.1009:33:00UTC+00U.S. Consumer Prices Unexpectedly Unchanged In September

Consumer prices in the U.S. were essentially flat in the month of September, according to a report released by the Labor Department on Thursday, with higher prices for shelter and food offset by declines in prices for energy and used cars and trucks.

The Labor Department said its consumer price index was unchanged in September after inching up by 0.1 percent in August. Economists had expected another 0.1 percent uptick.

Energy prices extended the steep drop seen in the previous month, tumbling by 1.4 percent in September after plunging by 1.9 percent in August. Gasoline prices led the way lower once again.

Meanwhile, the report said food prices inched up by 0.1 percent in September after coming in unchanged for three straight months.

The uptick in food prices came as five of the six major grocery store food group indexes increased over the month.

Excluding food and energy prices, core consumer prices crept up by 0.1 percent in September after rising by 0.3 percent for three straight months. Core prices had been expected to rise by 0.2 percent.

The Labor Department said prices for shelter continued to rise, climbing by 0.3 percent in September following a 0.2 percent increase in August.

Prices for medical care, household furnishings and operations, and motor vehicle insurance also rose, while prices for used cars and trucks plummeted by 1.6 percent. Prices for apparel also fell.

Compared to the same month a year ago, consumer prices in September were up by 1.7 percent, unchanged from the previous month. The annual rate of core price growth was also unchanged at 2.4 percent.

"The muted gain in core consumer prices in September underlines that even after the introduction of additional tariffs on Chinese imports, inflationary pressures are still well-contained," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

"With wage growth leveling off and unit labor costs growth stable, we don't think core inflation will rise further from here," he added. "As a result, the Fed will remain focused on the incoming activity data, which we expect to prompt one more 25bp rate cut by year-end."

On Tuesday, the Labor Department released a separate report showing an unexpected decrease in producer prices in the month of September.

The Labor Department said its producer price index for final demand fell by 0.3 percent in September after inching up by 0.1 percent in August. The drop surprised economists, who had expected another 0.1 percent uptick.

The unexpected decrease in producer prices came amid another steep drop in energy prices, which plunged by 2.5 percent in September, matching the nosedive seen in the previous month.

However, excluding the continued plunge in energy prices as well as a modest increase in food prices, core producer prices also slid by 0.3 percent in September after climbing by 0.3 percent in August. Economists had expected core prices to rise by 0.2 percent.

The drop in core prices came as the index for final demand services fell by 0.2 percent in September following a 0.3 percent increase in August.

Compared to the same month a year ago, producer prices in September were up by 1.4 percent, reflecting a notable slowdown from the 1.8 percent growth in August.

The annual rate of core producer price growth also slowed considerably to 2.0 percent in September from 2.3 percent in August.