U.S. consumer prices rise on strong gains in gasoline, rents

[October 18, 2016]  WASHINGTON (Reuters) - U.S. consumer prices rose in September as the cost of gasoline and rents surged, suggesting a steady build-up of inflation pressures that could keep the Federal Reserve on track to raise interest rates in December.

A Shell gas station is shown in Encinitas, California January 25, 2016. U.S. REUTERS/Mike Blake
 

The Labor Department said on Tuesday its Consumer Price Index increased 0.3 percent last month after rising 0.2 percent in August.

In the 12 months through September, the CPI accelerated 1.5 percent, the biggest year-on-year increase since October 2014.

The CPI increased 1.1 percent in the year to August.

Economists had forecast the CPI rising 0.3 percent last month and jumping 1.5 percent from a year ago.

But underlying inflation showed signs of moderating amid a slowdown in the pace of increases in healthcare costs after recent robust gains.The government revised prices for prescription drugs from May through August this year as incorrect data had been used to calculate price changes.

The so-called core CPI, which strips out food and energy costs, gained 0.1 percent last month after climbing 0.3 percent in August.

That slowed the year-on-year increase in the core CPI to 2.2 percent following a 2.3 percent rise in August.

The retreat in the monthly core CPI reading will probably do little to change the view that the Fed will raise interest rates at its December meeting.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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