WASHINGTON -- U.S. consumer prices rose a smaller-than-expected 0.2 percent in September, while manufacturing showed signs of slowing, further evidence inflation remains in check, government figures showed yesterday.
The closely watched core rate of the consumer price index, which excludes food and energy costs, rose 0.2 percent in September. In August, the CPI rose 0.2 percent and core rate increased 0.1 percent, indicating the economy may finish the year with the lowest inflation rate in 11 years.
Figures in the CPI report will trigger a 2.1 percent increase in next year's cost-of-living adjustment for the 44 million people who receive Social Security benefits. That's down from a 2.9 percent increase this year, and the smallest increase in a decade. Next year's monthly benefit check will average between $760 and $765.
The Federal Reserve Bank of Philadelphia said that factory activity in the mid-Atlantic region cooled in late September and early this month.
"The inflation concern has yet to move from a threat to a reality," said Joel Naroff, an economist at First Union Corp. in Philadelphia.
"We're seeing some moderation in growth," said Mike Trebing, an economist with the Philadelphia Federal Reserve Bank.
Competition and consolidation, as well as the advent of money-saving technology and the availability of cheap imports, restrained prices.
September's CPI report showed that subdued food and medical care costs offset the second straight monthly rise in energy prices as well as higher tobacco costs and airline fares.
What's more, for the first nine months of this year, consumer prices have risen at an annual rate of 1.8 percent, down from an annualized 3.3 percent increase for the first nine months of 1996.
The last time the yearly consumer price increase was so low was 1986, when a drop in oil prices pushed down the inflation rate to 1.9 percent.
Meantime, the core rate has risen at an annual rate of 2.2 percent for the first nine months of this year, down from a 2.7 percent gain during the first nine months of last year.
Yesterday's Labor Department figures showed first-time jobless claims barely moved last week, suggesting most of those seeking work are still having little trouble finding jobs.
New unemployment claims rose by 2,000 to 306,000, when adjusted for seasonal variations. Moreover, the insured unemployment rate, which measures the percentage of the labor force receiving jobless benefits and tracks the broader unemployment rate, remained at a record low 1.9 percent for the fifth straight week.
By category in September, energy prices, which account for 7 percent of the index, rose 1.3 percent led by gasoline and natural gas.
Food prices, which account for 16 percent of the index, increased just 0.1 percent last month.
Transportation costs rose 0.4 percent, partially reflecting the reintroduction of a tax on airline tickets. Auto prices increased 0.1 percent.
Pub Date: 10/17/97