The Economy
Consumer Prices Jump 1.2% on Rising Energy Costs
By Joi Preciphs
717 words
15 October 2005
The Wall Street Journal
A2
English
(Copyright (c) 2005, Dow Jones & Company, Inc.)
Rising energy costs pushed consumer prices up 1.2% in September, the fastest acceleration in more than 25 years, and led consumers to spend more on gasoline and less on cars, the government said.
But a slew of reports on the economy Friday also showed that energy price increases aren't -- yet -- boosting prices of other goods and services, and consumer spending on items other than cars and energy rose in September.
Separately, the Federal Reserve reported that industrial production dropped a sharp 1.3% in September, largely because of disruptions triggered by hurricanes Katrina and Rita and a strike at Boeing Co.
The stock market held on to earlier gains Friday as investors apparently found solace in the fact that core inflation -- which excludes food and energy -- rose a tame 0.1% in September.
That overall 1.2% increase in the Consumer Price Index is likely to prompt Federal Reserve policy makers to continue raising interest rates in the coming months. The Labor Department attributed 90% of the rise to a record 12% jump in energy prices in September -- the third consecutive month of energy price increases.
Gasoline prices rose 17.9% in September from August, and natural-gas prices climbed 12.1%, generating concern that consumers will curb their spending on other items. But while gasoline prices shot up, sales at the pump grew only 4% in September, according to the Commerce Department, indicating consumers made a major effort to conserve.
Meanwhile, General Motors, Ford and DaimlerChrysler registered sales declines of more than 30% throug ...