Energy costs expected to leave US CPI lower in September

The Bureau of Labor Statistics' (BLS) survey of consumer prices in September will provide an update on retail inflation as policymakers prepare for the October 27-28 Federal Open Market Committee (FOMC) meeting. Trimmed yet again by significantly lower energy costs, the Consumer Price Index (CPI) probably declined by 0.2% last month, after 0.1% dip in August. 

An anticipated pickup in non-energy services costs, combined with a projected modest rebound in core commodities prices, is expected to have pushed the core CPI excluding volatile food and energy components 0.1% higher for a third consecutive month. The gap between the year-to-year growth rates of the headline and core CPIs is forecast to have widened further during the reference period. Overall consumer prices likely slipped 0.1% below the level prevailing in September 2014, while the 12-month advance of the ex-food-and-energy measure probably held steady at 1.8%. 

Looking ahead, available figures point to a seasonally adjusted rebound in gasoline prices and a probable pickup in airline fares providing lifts to both the headline and core CPIs in October. While monetary policymakers are expected to look view last month's headline consumer price reading as the product of temporary falloffs in petroleum-based energy costs, there has admittedly been no meaningful movement towards achieving the inflation-side of the FOMC's dual mandate since the September gathering.