Consumer prices drop on cheaper gas
WASHINGTON — Cheaper gasoline lowered overall consumer prices slightly in October. But outside the steep drop at the pump, inflation stayed mild.
The consumer price index fell 0.1 percent last month, down from a 0.2 percent increase in September, the Labor Department said on Wednesday. The October decline was mainly because of a 2.9 percent drop in gasoline costs, the largest since April. During the past 12 months, overall prices have risen 1 percent, well below the Federal Reserve’s inflation target of 2 percent.
PNC Bank chief economist Stuart Hoffman said the low inflation reading ensures that the Fed will continue its extraordinary measures to spur growth.
“From the Federal Reserve’s perspective, inflation is too low, one reason why the central bank continues to provide massive stimulus to the economy,” Hoffman said in a note to clients.
Excluding volatile energy and food costs, so-called core prices rose 0.1 percent in October from September and have risen just 1.7 percent in 12 months. The prices for new vehicles, clothing and medical care fell last month. But airfares rose 3.6 percent.
U.S. gasoline prices began falling in the spring and reached two-year lows earlier this month. The average price of a gallon of gas was $3.21, according to AAA’s Daily Fuel Gauge Report.
The drop in fuel prices may be offset somewhat by slight increases in the cost of food, which rose 0.1 percent. That increase was driven by a 0.6 percent rise in the prices of meats, poultry, fish and eggs, the largest advance for any of the food categories.