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

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,979.13 59.54 0.35%
Nasdaq 4,526.48 -1.03 -0.02%
S&P 500 1,986.51 4.91 0.25%
Treasuries 2.43 0.02 0.87%
Data as of 4:31pm ET
Company Price Change % Change
Bank of America Corp... 15.52 0.07 0.45%
Apple Inc 100.57 0.04 0.04%
General Electric Co 26.36 0.31 1.19%
Intel Corp 34.50 0.16 0.47%
Staples Inc 11.32 -0.30 -2.58%
Data as of 4:03pm ET

Sections

Warren Buffett's investment firm will pay nearly $900,000 to settle allegations it did not tell federal regulators before taking a major ownership stake in a company, the government said. More

Median income is up 3.8% since 2011, though it's still down since the economic recovery began in 2009. More

Small business owners say the economy is still their biggest challenge, which keeps them from expanding and hiring, according to a CNNMoney-Manta survey. More

When hairdresser Mark Bustos isn't cutting the hair of fashion designers and real estate moguls, he's traveling around the world giving free haircuts to the homeless. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.