WASHINGTON, Oct 30 (Reuters) - U.S. consumer prices rose modestly in September but there was little sign of underlying inflation in the economy, which should give the Federal Reserve scope to maintain its monthly bond purchases.
The Labor Department said on Wednesday its Consumer Price Index increased 0.2 percent last month as energy prices rebounded, after edging up 0.1 percent in August.
In the 12 months through September, the CPI increased 1.2 percent, the smallest gain since April. It had advanced 1.5 percent in August.
Economists polled by Reuters had expected consumer prices to rise 0.2 percent last month and increase 1.2 percent from a year ago.
The benign inflation environment should allow the Fed to stay the course on its monthly bond purchases as it tries to stimulate the economy through low interest rates.
The Fed targets 2 percent inflation, although it tracks a gauge that tends to run a bit below the CPI.
Officials from the central bank are expected to keep their monthly $85 billion bond purchasing program in place when they conclude a two-day meeting later on Wednesday.
Stripping out the volatile energy and food components, the so-called core CPI nudged up 0.1 percent, rising by the same margin for a second consecutive month.
That took the increase over the past 12 months to 1.7 percent after rising 1.8 percent in August.
This measure touched a two-year low of 1.6 percent in June and the slowdown last month could catch the attention of some Fed officials who are concerned about inflation being too low.
Last month, inflation was lifted by a 0.8 percent rise in energy. That accounted for about half of the rise in the CPI last month. Energy prices had dropped 0.3 percent in August.
Food prices were flat in September. That was the weakest reading since May.
Within the core CPI, housing and medical care costs advanced, maintaining a recent trend. Owners’ equivalent rent of primary residence rose 0.2 percent after rising 0.3 percent in August.