The cost of living in the U.S. rose less than forecast in September, indicating companies are keeping a lid on price increases to stoke demand.
The consumer-price index rose 0.1 percent after 0.3 percent gains in the prior two months, figures from the Labor Department showed today in Washington. Economists projected a 0.2 percent gain, according to the median forecast in a Bloomberg News survey. Excluding volatile food and fuel costs, the so-called core rate was unchanged for a second month.
Target Corp. and Wal-Mart Stores Inc. are among retailers offering more discounted items in a bid to attract shoppers. With few signs of accelerating inflation, the Federal Reserve has room to ease monetary policy further to help rev up a recovery in which unemployment is close to a 26-year high.
“The immediate concern is not for additional price pressure,” said Robert Dye, a senior economist at PNC Financial Services Group Inc. in Pittsburgh, who accurately forecast the rise in the CPI. “In a weak-growth environment, retailers in particular will have difficulty raising prices.”
Retail sales climbed more than forecast in September, easing concern consumer spending will weaken and endanger the recovery. Purchases rose 0.6 percent following a 0.7 percent gain in August that was larger than previously estimated, Commerce Department figures showed today in Washington. The advance was broad-based, with clothing stores the only major category to show a decline in demand last month.
Stock-Index Futures
Stock-index futures increased after the reports. Futures on the Standard & Poor’s 500 Index rose 0.4 percent to 1,177 at 8:43 a.m. in New York. The yield on the 10-year Treasury note was little changed at 2.51 percent.
The forecast gain in consumer prices was based on the median of 79 economists in the Bloomberg survey. Estimates ranged from gains of 0.1 percent to 0.4 percent.
In the 12 months ended in September, prices rose 1.1 percent, matching the year-over-year gain the prior month.
The core rate rose 0.8 percent from September 2009, the smallest year-over-year gain since 1961.
Energy costs increased 0.7 percent from a month earlier, and food costs rose 0.3 percent.
Rental Prices
Owners-equivalent rent, one of the categories designed to track rental prices, was unchanged for a second month. Apparel prices fell 0.6 percent, the most since April, and electricity costs declined.
The cost of medical care increased 0.6 percent, the most since July 2007, including the biggest jump in medical care services since December 1991. New-car prices rose 0.1 percent.
The lack of overall price pressures is one reason economists in a Bloomberg survey taken Oct. 4 to Oct. 12 pushed back the timing of the Fed’s first increase in the benchmark interest rate to the first quarter of 2012, from the prior three months as predicted in September. The lending rate target has been in a range of zero to 0.25 percent since December 2008.
U.S. central bankers are debating the effects additional monetary stimulus would have on prices as they try to speed up the economy. The Fed’s statement on Sept. 21 was the first in almost two years of near-zero interest rates to say too-low inflation would warrant looser monetary policy.
Fed Meeting
The Federal Open Market Committee next meets Nov. 2-3. Minutes from its Sept. 21 meeting, released this week, showed policy makers discussed “several possible approaches” to supporting economic growth, mainly purchasing longer-term Treasury securities. Policy makers “saw only small odds of deflation,” according to the minutes.
Some retailers are piling on discounts ahead of the holiday season, typically their biggest sales period. Target said last week that it would lower prices on more than 1,000 toys to attract shoppers. Wal-Mart responded with its own discounts, advertising savings on brands such as Barbie and Nerf toys.
The CPI is the broadest of three monthly price gauges from the Labor Department, because it includes goods and services. Almost 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets.
A Labor Department report yesterday showed the producer- price index in September increased 0.4 percent, matching the previous month’s gain. The cost of goods imported into the U.S., reported earlier this week, fell 0.3 percent from the prior month.
The consumer-price index rose 0.1 percent after 0.3 percent gains in the prior two months, figures from the Labor Department showed today in Washington. Economists projected a 0.2 percent gain, according to the median forecast in a Bloomberg News survey. Excluding volatile food and fuel costs, the so-called core rate was unchanged for a second month.
Target Corp. and Wal-Mart Stores Inc. are among retailers offering more discounted items in a bid to attract shoppers. With few signs of accelerating inflation, the Federal Reserve has room to ease monetary policy further to help rev up a recovery in which unemployment is close to a 26-year high.
“The immediate concern is not for additional price pressure,” said Robert Dye, a senior economist at PNC Financial Services Group Inc. in Pittsburgh, who accurately forecast the rise in the CPI. “In a weak-growth environment, retailers in particular will have difficulty raising prices.”
Retail sales climbed more than forecast in September, easing concern consumer spending will weaken and endanger the recovery. Purchases rose 0.6 percent following a 0.7 percent gain in August that was larger than previously estimated, Commerce Department figures showed today in Washington. The advance was broad-based, with clothing stores the only major category to show a decline in demand last month.
Stock-Index Futures
Stock-index futures increased after the reports. Futures on the Standard & Poor’s 500 Index rose 0.4 percent to 1,177 at 8:43 a.m. in New York. The yield on the 10-year Treasury note was little changed at 2.51 percent.
The forecast gain in consumer prices was based on the median of 79 economists in the Bloomberg survey. Estimates ranged from gains of 0.1 percent to 0.4 percent.
In the 12 months ended in September, prices rose 1.1 percent, matching the year-over-year gain the prior month.
The core rate rose 0.8 percent from September 2009, the smallest year-over-year gain since 1961.
Energy costs increased 0.7 percent from a month earlier, and food costs rose 0.3 percent.
Rental Prices
Owners-equivalent rent, one of the categories designed to track rental prices, was unchanged for a second month. Apparel prices fell 0.6 percent, the most since April, and electricity costs declined.
The cost of medical care increased 0.6 percent, the most since July 2007, including the biggest jump in medical care services since December 1991. New-car prices rose 0.1 percent.
The lack of overall price pressures is one reason economists in a Bloomberg survey taken Oct. 4 to Oct. 12 pushed back the timing of the Fed’s first increase in the benchmark interest rate to the first quarter of 2012, from the prior three months as predicted in September. The lending rate target has been in a range of zero to 0.25 percent since December 2008.
U.S. central bankers are debating the effects additional monetary stimulus would have on prices as they try to speed up the economy. The Fed’s statement on Sept. 21 was the first in almost two years of near-zero interest rates to say too-low inflation would warrant looser monetary policy.
Fed Meeting
The Federal Open Market Committee next meets Nov. 2-3. Minutes from its Sept. 21 meeting, released this week, showed policy makers discussed “several possible approaches” to supporting economic growth, mainly purchasing longer-term Treasury securities. Policy makers “saw only small odds of deflation,” according to the minutes.
Some retailers are piling on discounts ahead of the holiday season, typically their biggest sales period. Target said last week that it would lower prices on more than 1,000 toys to attract shoppers. Wal-Mart responded with its own discounts, advertising savings on brands such as Barbie and Nerf toys.
The CPI is the broadest of three monthly price gauges from the Labor Department, because it includes goods and services. Almost 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets.
A Labor Department report yesterday showed the producer- price index in September increased 0.4 percent, matching the previous month’s gain. The cost of goods imported into the U.S., reported earlier this week, fell 0.3 percent from the prior month.
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