WASHINGTON (AP) — U.S. consumer prices were unchanged in October as a fourth straight decline in gasoline costs helped to keep inflation at bay.
The steady reading for inflation last month followed a tiny 0.1 percent increase in September and a 0.2 percent drop in August, the Labor Department said Thursday. Energy prices fell 1.9 percent last month while food costs edged up a slim 0.1 percent.
Core inflation, which excludes volatile energy and food, rose 0.2 percent in October. For the past 12 months, overall inflation is up 1.7 percent while core inflation is up a similarly modest 1.8 percent.
Both gains are well below the Federal Reserve's 2 percent inflation target, giving the central bank leeway to keep interest rates low to boost the economy without worrying about inflation.
"Inflation remains very much in check despite the pickup in the economy over the past few quarters," said Jim Baird, chief investment officer for Plante Moran Financial Advisors. "Weaker global commodity demand, a stronger U.S. dollar and lackluster wage growth have all helped to keep inflationary pressures in check."
The 0.1 percent rise in food prices was the smallest monthly increase since June. Over the past 12 months, food prices are up 3.1 percent, one of the biggest gains for any category and a reflection of drought conditions in California and other adverse weather patterns which have affected crops.
Gasoline costs were down 3 percent in October and analysts are looking for further declines giving continued drops in global oil prices. The AAA reports that the nationwide average for gas is currently $2.86, down from $3.11 a month ago.
The modest inflationary pressures have allowed the central bank to keep interest rates at a record low for the past six years to help the economy recover from the worst recession since the 1930s.
Inflation, already low, has slowed further in recent months, helped by the declines in energy costs and a stronger dollar, which makes foreign goods cheaper for U.S. consumers.
Analysts expect these inflation trends to continue depressing prices, giving the Fed more room to manage monetary policy. Many economists don't expect the Fed to start raising interest rates until the middle of next year.