The US consumer prices increased marginally in September, portraying a feeble picture of inflation in the country, which is providing the Federal Reserve with ample reasons to keep the interest rates low for a while.
The US Consumer Price Index (CPI) rose 0.1 percent in September amid the rising costs of food and shelter counterbalanced the dip in energy prices, the Labor Department said on Wednesday.
“The ongoing inflation weakness will provide the US Central Bank with a scope to take a restrained approach towards tightening the monetary conditions,” said Robert Hughes, senior research fellow at Massachusetts’ American Institute for Economic Research in Great Barrington.
Several economists had made forecasts of a flat reading last month.
The CPI had declined 0.2 percent in August. In the 12 months through September, the Consumer Price Index had jumped 1.7 percent after a similar gain in August.
The Federal Reserve targets two percent inflation and is tracking an index which is running even at lower rate than the CPI.
The inflation in the US has waned in the recent months after quickening in the second quarter on a stronger dollar, sluggish economic growth in China and the dampening import prices of the euro zone. The lower wage growth has also supported in keeping a lid on prices.
In the backdrop of the soft inflation rate and a recent global equities market sell-off, the investors were forced to push back their expectations for when the Fed will hike interest rates from the current near zero to late next year. Notably, the US Central Bank had recently looked for a raise in interest rate in July.
In order to have a proper assessment of the inflation environment, the economists and the market analysts will be closely monitoring the meeting of the Fed officials scheduled for next week and their statement that will arrive following the conclusion of the two-day meet.
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