WASHINGTON (AP) — U.S. consumer prices edged up a slight 0.1 percent in October, the smallest gain in three months as energy prices retreated.
The tiny October gain in consumer prices followed increases of 0.5 percent in September and 0.4 percent in August, the Labor Department reported Wednesday. After two months of big gains in the cost of energy, those prices fell 1 percent in October. Gasoline prices were down 2.3 percent.
Core inflation, which excludes food and energy, rose a modest 0.2 percent in October after a 0.1 percent rise in September. Over the past 12 months, inflation is up 2 percent, while core prices have risen 1.8 percent.
Even though the current economic expansion is in its ninth year, inflation pressures have remained modest.
Inflation by a measure preferred by the Federal Reserve has been stuck well below the Fed's target of 2 percent annual price gains. But private economists still believe the central bank will boost its benchmark interest rate for a third time when it meets again next month.
Despite this year's slowdown in inflation, Fed Chair Janet Yellen and other Fed officials have expressed the belief that tight labor markets will soon start to push up wage gains, which would then boost inflation. Unemployment in October fell to 4.1 percent, the lowest level in nearly 17 years.
The Fed has raised its benchmark lending rate twice this year in quarter-point moves in March and June. The rate remains at a still-low 1 percent to 1.25 percent, and Fed officials have continued to project that rate increases will be gradual.
At the moment, the Fed is projecting three rate increases in 2018. Many analysts believe that forecast will change little even as the makeup of the Fed undergoes change. President Donald Trump has announced that he plans to replace Yellen as Fed chair with Fed board member Jerome Powell, a centrist Republican who is expected to follow Yellen's gradual approach to raising rates.
For October, food prices were flat and have risen by a modest 1.3 percent over the past year. The 1 percent fall in energy prices left them up 6.4 percent over the past 12 months.
Prices of new cars, recreation and clothing all declined in October. Prices for medical care, used cars, tobacco products and car insurance rose.