Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

CPI: Inflation rate stays uncomfortably low

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com) -- Consumer prices are up slightly over last year driven by climbing food and energy costs, but still lower than policymakers would like.

The Consumer Price Index, a key measure of inflation, rose 1.1% over the last 12 months ending in September, the Bureau of Labor Statistics said Friday, unchanged from the previous month. Any number above zero means prices are rising, but a rate around 1% is considered slow growth.

Shortly ahead of the report, Federal Reserve Chairman Ben Bernanke gave a speech on the "low inflation environment," saying inflation trends will likely "remain subdued for some time."

"Inflation is running at rates that are too low" Bernanke warned. "The risk of deflation is higher than desirable."

The possibility of rising inflation had also been a concern amid speculation of further easing of U.S. monetary policy. But the low CPI reading dissuaded some of those fears, lending more support to predictions that the Fed will buy more long-term Treasurys in November, said Mark Vitner, senior economist with Wells Fargo.

"There really isn't a whole lot of reason to worry about inflation right now, and that gives the Fed a free hand to do whatever they need to do," Vitner said.

The CPI report was also closely watched by policymakers this month, because the government used the data to determine Social Security beneficiaries will not get a cost of living increase in 2011.

Prices remain sluggish

The so-called core CPI, which strips out volatile food and energy prices, rose at a 0.8% annual rate in September, down slightly from 0.9% in August.

Food prices posted their largest increase since October 2008, rising 1.4% during the year. Energy prices rose 3.8%.

For September, CPI rose just 0.1% month over month, lower than expectations. Prices were expected to have increased 0.2% in September, after climbing 0.3% the previous month, according to consensus estimates from Briefing.com.

Core CPI for the month was flat. Economists had expected it to have inched up 0.1%, after rising the same amount in August.  To top of page

Index Last Change % Change
Dow 22,956.96 85.24 0.37%
Nasdaq 6,624.01 18.20 0.28%
S&P 500 2,557.64 4.47 0.18%
Treasuries 2.31 0.03 1.18%
Data as of 5:52am ET
Company Price Change % Change
Bank of America Corp... 26.24 0.41 1.59%
General Electric Co 23.36 0.38 1.65%
PG&E Corp 53.43 -4.29 -7.43%
Advanced Micro Devic... 14.26 0.04 0.28%
Micron Technology In... 41.49 1.09 2.70%
Data as of Oct 16
Sponsors

Sections

More than 5% of DACA recipients have started their own businesses since enrolling the program, according to a recent survey. More

Crashing out of the EU without a trade deal will cost British households an extra £260 ($345) a year, according to a new report. More

Netflix plans to continue ramping up its spending as the arms race for original content heats up. More

More than 30 companies have been sued by the government over the past month for scamming student loan borrowers. More