The Labor Department reported today that consumer prices rose 0.2 percent last month. Prices excluding energy and food were also up 0.2 percent, slightly higher than the 0.1 percent increase analysts had forecast.
Over the past 12 months, consumer prices are down 1.3 percent, reflecting a severe recession which has kept a lid on price pressures across a wide range of products and services.
The absence of price pressures has been good news for cash-strapped households, but it will mean that the more than 57 million Americans receiving Social Security and other government benefits will not see their benefits rise next year, the first time there has been no cost-of-living increase in more than three decades.
However, President Obama on Wednesday urged Congress to provide a one-time payment of $250 to help senior citizens get cope with the absence of a boost in their benefit checks next year. Such a payment would cost the government about $13 billion.
The 0.2 percent September rise in the Labor Department’s Consumer Price Index followed a bigger 0.4 percent jump in August. Prices had been flat in July.
Energy prices were up 0.6 percent in September after a much bigger 4.6 percent jump in August. Last month, gasoline prices on a seasonally adjusted basis rose by 1 percent. But over the past year, gasoline prices are down 21.6 percent, reflecting the retreat that has occurred since last year’s surge in energy costs which had pushed gasoline above $4 per gallon at one point.
Food costs slipped by 0.1 percent in September reflecting lower costs for meat and fresh vegetables.
The 0.2 percent rise in prices excluding food and energy left core inflation rising a modest 1.5 percent over the past 12 months, well within the Federal Reserve’s comfort zone for inflation.
While food prices were down in September, new car prices rose by 0.4 percent, a rebound from a big 1.3 percent drop in August that had reflected the government’s incentives of up to $4,500 per vehicle in its popular Cash for Clunkers program which encouraged people to trade in old models for new fuel-efficient cars.
Airline tickets jumped 3.4 percent, reflecting the fare increases struggling airlines are putting into effect to boost their bottom lines. Clothing prices edged up 0.1 percent in September and are up just 1.1 percent for the whole year, reflecting the hardtimes facing the nation’s retailers.
Real average hourly earnings fell 0.1 percent from August to September 2009. This decline stemmed from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), up by 0.2 percent, outpacing 0.1 percent growth in average hourly earnings. Over the year real average hourly earnings increased 4.4 percent.
