Consumer prices in U.S. rose in September on fuel costs

The cost of living in the U.S. rose in September for a second month, reflecting a jump in energy expenses that failed to trickle through to other goods and services.

The consumer-price index increased 0.6 percent for a second month, the Labor Department reported today in Washington. Economists surveyed by Bloomberg had forecast a 0.5 percent advance. The so-called core measure, which excludes more volatile food and energy costs, climbed 0.1 percent, less than projected.

Companies such as Abercrombie & Fitch Co. and Safeway Inc. are among those saying price increases are difficult to achieve as 12.1 million Americans remain unemployed and rising fuel bills eat into workers’ paychecks. The lack of pricing power is one reason the Federal Reserve eased policy further to focus on jump-starting employment.

“There isn’t any meaningful risk of short-term core inflation,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who correctly forecast the gain in core prices. “When it comes to everyday goods and services, the lack of demand just isn’t going to push prices higher.”

Treasuries remained lower after the report. The benchmark 10-year yield climbed five basis points, or 0.05 percentage point, to 1.71 percent at 8:58 a.m. in New York, according to Bloomberg Bond Trader prices.

Economists’ Estimates

Estimates for the price index from the 86 economists surveyed ranged from gains of 0.1 percent to 0.7 percent.

Today’s consumer-price report also suggested the estimated monthly payment for retired workers receiving Social Security benefits will rise 1.7 percent in 2013. It’s up to the Social Security Administration to issue the official figures based on today’s data.

In the 12 months ended in September, prices rose 2 percent, the report showed.

The increase in the core reading followed similar 0.1 percent gains in August and July and was lower than the 0.2 percent advance median forecast by economists surveyed. Core prices were up 2 percent for the year through September, compared with 1.9 percent for the year through August.

Today’s report showed energy costs increased 4.5 percent from a month earlier. The cost of a gallon of regular gasoline averaged $3.83 in September compared with $3.70 in August, according to data from auto club AAA.

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