The consumer price index rose 0.5% in September and 2.2% vs. a year earlier, the Labor Department reported on Friday. Core prices, which exclude food and energy, rose 0.1% on the month and 1.7% from a year ago.
Wall Street expected the headline CPI to rise 0.6% on the month and 2.3% from a year ago, thanks to a hurricane-inflicted boost in energy prices. The core CPI was expected to rise 0.2% and 1.8% from a year ago. Hurricane effects also raised the risk of an uptick in core inflation, as the owners of damaged homes and destroyed vehicles began repairs and shopped for replacements, but new and used vehicle prices fell.
After the report, the 10-year Treasury yield moved lower. The CPI data likely doesn’t change the near-term outlook for Federal Reserve policy, with markets expecting a December rate hike, but it could lower the odds that the Fed will stick to its plan of three rate hikes in 2018.
Futures for the S&P 500 index, Nasdaq 100 and Dow industrials held onto gains on the stock market today after the inflation report. JPMorgan Chase (JPM), Bank of America (BAC) and other financials lost ground as the data dampened prospects for wider net interest margins that can come from higher long-term interest rates. BofA reported better-than-expected earnings early Friday, while Wells Fargo missed on revenue.
Prices for food consumed at home didn’t budge in September after a 0.2% drop in August that may have partly reflected price cuts at Whole Foods after Amazon.com (AMZN) closed its acquisition. Target (TGT) announced price cuts in early September. Prices for food consumed away from home rose 0.4%.
Prices for telephone hardware and related consumer information gear fell 1.2%, showing no obvious shift from its steady downward trend after Apple (AAPL) released its pricey iPhone 8.
Read more: http://www.investors.com/news/economy/core-cpi-tame-in-september-as-medical-care-inflation-hits-50-year-low/