WASHINGTON: US consumer prices were unchanged in September and underlying inflation retreated, supporting expectations the Federal Reserve will cut interest rates in October for the third time this year amid risks to the economy from trade tensions.
The Labor Department said the flat consumer price index last month was the weakest reading since January and came as increases in the cost of food and rents were offset by decreases in the prices of energy and used cars and trucks. The so-called core CPI was restrained by moderated gains in healthcare costs, as well as declines in apparel, new motor vehicles and communications prices. In the 12 months through September, the core CPI increased 2.4 per cent, matching August's rise.
The central bank tracks the core personal consumption expenditures price index for its 2.0 per cent inflation target. The core PCE price index rose 1.8 per cent on a year-on-year basis in August and has fallen short of its target this year. In another report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 210,000 for the week ended Oct 5.