US Consumer Prices Rise On Gasoline and Shelter Costs In September

• The minutes from the Federal Reserve's September policy meeting highlighted the central bank's close monitoring of the data, making that day's consumer prices report even more important.
• Participants stressed the need to see more data indicating a decrease in inflation pressures during the September confab of the Federal Open Market Committee - the Fed's rate-setting body. The Bureau of Labour Statistics consumer prices report was expected to show abating inflation pressures in September, if only marginally.
• Headline CPI was seen rising by 0.3% on the month, down from 0.6% in August, which would have taken the annual rate to 3.6%. Core inflation, which strips out volatile energy and food prices, was expected to have also risen by 0.3% in September. On an annual basis, that would have left core CPI at 4.1%, its lowest level in two years. This would have been welcome news for the U.S. central bank, but the path to lower inflation and a return to the 2% target looked trickier from there.
• The threat of higher energy prices following the outbreak of a war between Israel and Palestinian militants was all too real, even if the immediate market reaction was relatively muted. Oil rose by as much as 4% at one point on Monday but returned to levels it was at before Hamas militants crossed the Israeli border on Saturday. Natural gas prices in Europe and the U.S. were both holding near multi-month highs, as there was already evidence that supply could be affected after the Israeli energy ministry instructed Chevron to shut down production at its Tamar facility.
• Policymakers around the globe were likely to signal they would look through any short-term boost to inflation if the conflict were to escalate, but the path back to 2% could still take longer than previously thought.
• At that time, equities in Europe were broadly higher, futures in the U.S. were pointing to a positive open, while the dollar was flat after a six-day streak of daily losses.

(Source: Reuters)