Prices at the Pump Drive October Inflation Increase
By Amara Omeokwe
WASHINGTON -- Gasoline costs pushed up prices for U.S. consumer
goods in October, while new tariffs on imports appeared to have
little effect on what Americans paid for clothing and household
The consumer-price index -- which measures the costs of everyday
goods and services from food to dental care -- a seasonally
adjusted 0.4% in October from the previous month, the Labor
Department said Wednesday. Core prices, excluding often volatile
food and energy categories, were up 0.2%.
The U.S. placed duties on a range of Chinese imports this fall
as part of the continuing trade war -- including clothing, tools,
electronics and other consumer goods. But a 1.8% drop in apparel
prices helped hold down overall core inflation in October.
Consumers generally aren't shouldering the costs of those
levies, said Josh Nye, senior economist at RBC. "Probably because
of competitive pressures or other factors, businesses haven't been
able to pass along much of the tariff price increases they're
seeing [to consumers]," he said.
The consumer-price index increased 1.8% in October from a year
earlier, higher than the 1.7% year-over-year increase seen in the
previous two months. Core prices were up 2.3% over the year.
"The broader story remains the same: Inflation pressures remain
mild, and it will be some time before inflation becomes a main
concern for the [Federal Reserve]," Richard Moody, chief economist
at Regions Financial Corp., said in a note to clients.
Fed Chairman Jerome Powell said in congressional testimony
Wednesday that inflation pressures remained muted, and he signaled
comfort with the central bank's current interest-rate stance, with
its benchmark interest rate at a range between 1.5% and 1.75%.
"Looking ahead, my colleagues and I see a sustained expansion of
economic activity, a strong labor market, and inflation near our
symmetric 2 percent objective as most likely," Mr. Powell told
The Fed's preferred inflation gauge -- called the
personal-consumption expenditures price index, a separate measure
from the Commerce Department's -- -has trended lower than the
consumer-price index and below the 2% rate the Fed targets. The PCE
index rose 1.3% in September from a year earlier.
Energy prices, which rose 2.7% in October from the previous
month, accounted for more than half the gains in the headline
consumer-price index, according to the Labor Department. Gas prices
increased 3.7%, helping drive the advance in the overall energy
Wednesday's consumer-price index report showed Americans also
paid more for items such as food, used cars and medical
A separate Labor Department report released Wednesday showed
U.S. inflation-adjusted wages declined in October, as increases in
consumer prices outpaced gains in earnings. Real average hourly
wages fell a seasonally adjusted 0.2% in October from September,
despite an unemployment rate that is hovering near a 50-year
Wage gains, subdued inflation and a solid labor market have
helped spur consumer spending this year, in turn helping to prop up
the broader economy.
Slower wage growth could drag on consumer strength and the wider
economy. Household spending, for instance, was a major contributor
to a 1.9% increase in gross domestic product in the third quarter
from the previous quarter, at a seasonally adjusted annual
Write to Amara Omeokwe at email@example.com
(END) Dow Jones Newswires
November 13, 2019 13:30 ET (18:30 GMT)
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