Washington, DC, United States (4E) – Consumer prices in the U.S. saw a modest increase in September, which reflects low inflation and reinforces a likely move by U.S. Federal Reserve policymakers to maintain the current pace of their bond-purchasing program Wednesday.
The consumer price index rose 0.2 percent, in line with the median estimate of 86 economists surveyed by Bloomberg News, after climbing 0.1 percent in the previous month, according to a Labor Department report released Wednesday in Washington.
The so-called core measure, which excludes volatile items like fuel and food, increased 0.1 percent for the second consecutive month, which is less than forecast.
Overall prices climbed 1.2 percent from a year ago, while core prices rose 1.7 percent. The increase in overall prices shows higher costs for home rentals, medical care and energy. The inflation figure, however, is still below the Federal Reserve’s annual target of 2 percent, which means the U.S. economic recovery remains sluggish.
With inflation still below the Fed’s goal, the central bank has more room keep its $85bn monthly bond-buying program.
The Fed cited weak inflation as the reason behind the September decision to keep the program intact. Critics of the program said it has very limited impact in lowering unemployment but may lead to higher inflation at some point.
Wednesday’s report is the latest signal that business activity is slowed down by the sluggish recovery, reducing firms’ capacity to increase prices for goods and services.