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A customer shops in the baby department at a Sam's Club in Rogers, Arkansas in this June 3, 2010 file photograph. (SARAH CONARD/REUTERS)
A customer shops in the baby department at a Sam's Club in Rogers, Arkansas in this June 3, 2010 file photograph. (SARAH CONARD/REUTERS)

U.S. core inflation muted in September Add to ...

U.S. consumer prices outside food and energy rose less than expected in September to post their smallest gain in six months, a government report showed on Wednesday, suggesting inflation pressures remained contained.

The Labor Department said its core Consumer Price Index edged up 0.1 per cent as prices for new cars were flat and rentals rose modestly. The index increased 0.2 per cent in August. Economists had expected core CPI to rise 0.2 per cent last month.

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Overall consumer prices increased 0.3 per cent last month, as expected, after advancing 0.4 per cent in August.

The moderate rise in consumer prices offered assurance that inflation pressures remained in check despite a sharp rise in wholesale prices last month.

It also suggested the Federal Reserve had some wiggle room for further monetary policy easing, should the economic recovery falter.

Core consumer prices last month were restrained by new motor vehicle costs, which were unchanged for a third straight month. This likely reflects a normalization in supplies after the March earthquake in Japan disrupted production.

Prices for used cars and trucks fell 0.6 per cent after months of gains. Apparel prices dropped 1.1 per cent, the largest decline since September 1998. Shelter costs edged up 0.1 per cent, the smallest rise since April, as owners’ equivalent rent edged up 0.1 per cent after rising 0.2 per cent in August.

The Bureau of Labor Statistics uses owners equivalent rent to measure the amount homeowners would pay to rent or would earn from renting their property.

In the 12 months to September, core CPI increased 2 per cent after rising 2 per cent in August.

This measure has rebounded from a record low of 0.6 per cent in October and the Fed would like to see that closer to 2 per cent.

A 2.9-per-cent increase in the price of gasoline pushed overall consumer prices last month. Gasoline had risen 1.9 per cent in August. Food prices gained 0.4 per cent after increasing 0.5 per cent in August. In the 12 months through September, consumer prices rose 3.9 per cent after advancing 3.8 per cent in August.

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