U.S. consumer prices recorded their biggest drop in eight months in September as the cost of gasoline fell, but a steady pick-up in underlying price pressures should allay fears that a disinflationary trend was reasserting itself.
The Labor Department said on Thursday its Consumer Price Index fell 0.2 percent last month after slipping 0.1 percent in August. In the 12 months through September, the CPI was unchanged for the first time in four months after rising 0.2 percent in August.
Economists polled by Reuters had forecast the CPI falling 0.2 percent in September and dipping 0.1 percent from a year ago. The so-called core CPI, which strips out food and energy costs, rose 0.2 percent after ticking up 0.1 percent in August.
Low inflation, which has persistently run below the Federal Reserve's 2 percent target, is a major hurdle to an interest rate hike this year. Policymakers who are divided on when to tighten monetary policy could take comfort in last month's increase in the core PPI.