Tens of millions of Social Security beneficiaries and other retirees can expect an increase in benefits next year as inflation edges higher. (AP file photo)
WASHINGTON: Consumer prices edged up a slight 0.1% in September as energy prices retreated after a big gain in August.
The Labor Department said on Thursday that the September gain in its closely watched consumer price index followed a 0.2% rise in August. It was the smallest monthly gain since June.
Inflation has been on a slight rise this year after a prolonged stretch when prices kept falling below the 2% target set by the Federal Reserve. For the 12 months ending in September, consumer prices were up 2.3%.
Core inflation, which excludes volatile energy and food costs, rose 0.1% in September, the same level as in August. It is up 2.2% over the past year.
The Fed has raised interest rates three times this year and signalled that it will raise rates one more time in 2018 in an effort to make sure that a strong economy and low unemployment do not trigger an unwanted rise in inflation. The jobless rate fell to a 49-year low of 3.7% in September.
But President Donald Trump has stepped up his criticism of the Fed’s rate hikes, calling them unwarranted. Rising interest rates were one of the factors blamed for the big sell-off on Wall Street this week.
Trump, who has often pointed to the stock market surge as evidence that his economic policies are working, said on Wednesday that the Fed had “gone crazy” raising short-term interest rates.
“The Fed is making a mistake. They’re so tight,” Trump told reporters before a campaign rally in Pennsylvania on Wednesday evening.
It marked Trump’s latest attack in a string of criticism that began in the summer. Fed chairman Jerome Powell, who took over the top Fed job in February, has not responded directly to Trump’s attacks other than to say that the central bank believed its policy of gradual rate increases marked the best approach to extending the current recovery and making sure inflation does not become a problem.
So far, inflation, while higher than it has been, is remaining close to the Fed’s target of 2% annual price increases. But some economists worry that with labour markets so tight, wage gains will start to accelerate, forcing businesses to charge more for their products.
For September, energy prices fell 0.5% after a 1.9% surge in August. Food costs were flat in September after a tiny 0.1% rise in August.
The Social Security Administration announced that millions of recipients of Social Security and other government benefits will receive a 2.8% increase in their monthly payments starting in January. That will be the biggest cost-of-living increase in seven years. The adjustment is based on the third quarter average for consumer prices this year compared to the third quarter of 2017.