High Gas Prices Push Up Consumer Prices

WASHINGTON -- The U.S. Labor Department said Tuesday that the consumer price index rose a seasonally adjusted 0.6 percent last month, matching its August increase. In the past 12 months, prices have increased 2 percent, in line with the Federal Reserve's inflation target.

Higher gas costs drove up U.S. consumer prices in September for the second straight month. But excluding volatile food and energy costs, prices rose just 0.1 percent. In the past year, so-called core prices have increased 2 percent, according to the Associated Press (AP).

Food prices rose just 0.1 percent. The cost of meat, chicken and eggs fell. Dairy prices rose.

Gas prices rose sharply over the summer and into September, but have since come down. The average price for a gallon of gas nationwide was $3.77 on Tuesday, about 9 cents below last month's level.

Tuesday's report noted that gas prices rose a seasonally adjusted 7 percent in September, below August's 9 percent increase.

The summer's drought in the Midwest could affect grocery prices, said the AP. The drought caused spikes in the cost of corn, soybeans and other grains. Those grains are used in animal feed, which pushes up the price of chicken, beef and pork. And corn is also used in many products from cereals to soft drinks to cosmetics.

One analyst said that stiff competition among retailers will likely limit any future food price increases.

The AP also reported that the cost of rent, clothing and airline tickets rose last month, pushing up core prices. Those increases were partly offset by a 1.4 percent drop in used car and truck prices, the steepest drop since February 2009. New car prices and the cost of furniture also fell.

The unemployment rate fell to 7.8 percent last month, the first time the rate has been below 8 percent since January 2009.

Still, job growth remains too weak to rapidly bring relief to the more than 12 million Americans who are unemployed, according to the report.