US sees slowing inflation in September 2020 amid pandemic disruptions

The United States saw only a small rise in inflation in September, said government data released on Tuesday, October 13, as consumer preferences shifted amid the ongoing pandemic.

The Department of Labor’s consumer price index rose 0.2% seasonally adjusted last month, in line with consensus and a decrease from the 0.4% gain seen in August.

The data’s release comes as Washington lawmakers remain deadlocked over new spending measures to support consumption after key parts of the CARES Act stimulus package expired.

It also shows how consumers’ priorities and spending habits have changed as the US grapples with the world’s worst outbreak of COVID-19. 

The Labor Department said the index for used cars climbed 6.7%, supporting most of the upward growth in the overall index, though a 4.2% increase in natural gas that pushed the energy index up 0.8% overall also contributed.

“The jump in used car and truck prices over the past 3 months likely reflects the increased demand from city-dwellers who no longer are comfortable taking mass transit and others who have left the city altogether,” said Kathy Bostjancic of Oxford Economics, adding she doesn’t expect the growth to continue.

Ian Shepherdson of Pantheon Macroeconomics said the data contained another sign of the pandemic’s effects in the form of weak rent prices, with the index for shelter rising only 0.1%, the same gain as in August.

“As far as we can tell, this reflects a pandemic-induced plunge in rents in several major cities, including San Francisco and New York, rather than collapse in rent payment rates, which appear to have dipped only slightly,” he said.

Other sectors shunned by consumers included airline fares, which dropped 2% from August and lodging away from home, which decreased 0.4%. – Rappler.com