Consumer prices fall 0.2 per cent in September, pulled down by freefall in gasoline prices

WASHINGTON – U.S. consumer prices were dragged lower again last month by plunging energy costs, according to the Labor Department.

The consumer price index fell 0.2 per cent in September, following a 0.1 per cent drop in August. Gasoline prices dropped 9 per cent last month after falling 4.1 per cent in August. Overall consumer prices were unchanged over the past year.

Excluding volatile food and energy prices, so-called core consumer prices rose 0.2 per cent from August and 1.9 per cent from September 2014.

The Federal Reserve wants to see annual inflation running close to 2 per cent. The overall number is well short of that goal, but core inflation is close. The Fed decided last month to hold off on a long-anticipated increase of short-term interest rates, which it has kept near zero since December 2008.

An economic slowdown in China has pushed down prices of commodities, including oil. Consumer energy prices are down 18.4 per cent over the past year; unleaded regular gasoline prices have fallen 30.5 per cent. A rising U.S. dollar makes imports cheaper, also helping keep inflation at bay.

Laura Rosner, economist at BNP Paribas, noted that services prices, excluding energy services, rebounded 0.3 per cent last month. “Today’s report should be reassuring to markets which have been on edge over global disinflation risks,” Rosner wrote in a research report. ” It helps keep the possibility of a (Fed) move at the end of this year alive, although our central scenario remains for a delay until at least March 2016.”

The Labor Department reported Wednesday that prices for manufacturers, farmers and other producers dropped 0.5 per cent in September after being unchanged in August.