Consumer prices jumped 0.5 percent in September, the biggest advance since June, as energy prices rebounded sharply, the Labor Department said today.
The increase in the Consumer Price Index, the government’s most closely watched inflation gauge, followed a 0.1 percent decline in August, which had been the first drop in 14 years.
In both August and September, the CPI was dominated by energy movements. After falling by 2.9 percent in August, energy prices shot up 3.8 percent in September, the biggest advance since a 5.6 percent surge in June.
The big rise in energy, which consumers have felt in sharply rising gasoline prices and home heating oil costs, prompted President Clinton last month to order the release of oil from the government’s Strategic Petroleum Reserve.
While so far, the steep increases have been mainly contained in the energy sector, economists are worried about a spillover effect that could send overall inflation higher, setting off alarm bells at the Federal Reserve.
Housing Starts Modestly Higher
In a separate report, the Commerce Department said construction starts on new homes and apartments eked out a small gain in September, adding to signs the nation’s housing sector has been chilled by higher interest rates.
Housing starts rose 0.3 percent to a seasonally adjusted 1.53 million a year — weaker than the 1.545 million rate forecast by Wall Street economists — after a slightly revised 0.1 percent decline in August to 1.525 million a year. Starts peaked in February this year at an annual rate of 1.822 million and have been on a steady downward trend since that time.
Regionally, September starts dropped 4.4 percent in the South — the nation’s largest housing market—to an annual rate of 671,000. They were down in the Midwest by 2.6 percent to 296,000 a year. But in the Northeast, September starts climbed 8.1 percent to 160,000 a year and in the West they were up 8.6 percent to 403,000.