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Inflation Not a Factor in September

Lower gas prices ease burden on consumers

By Mark Huffman
ConsumerAffairs.com

October 16, 2008

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A lot of bad things happened to the economy in September, but an increase in inflation was not one of them. The latest report from the U.S. Labor Department shows the Consumer Price Index was mostly flat last month.

The big leveler on prices in September was gasoline. After months of dramatic increases, fuel prices were moving in the opposite direction last month, giving consumers a much-needed break at the gas pump.

The government's consumer price index was unchanged after a 0.1 percent drop in August. So-called core prices, which exclude food and energy, rose 0.1 percent. Both were less than most economists had forecast.

It might be considered surprising that the rate didn't actually fall last month. After all, the drop in energy costs was nothing short of dramatic. The Labor Department data shows energy costs fell 1.9 percent, thanks in part to the largest drop in natural gas prices on record. Gasoline prices were down 0.6 percent.

So far in the last 12 months, consumer prices are up 4.9 percent, so economists say today's data is an encouraging sign that inflationary pressures are lessening. But by the same token, the reasons for the drop may be because the economy is slowing.

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