U.S. consumer prices up only slightly in September

Consumer prices edged up a slight 0.1 percent in September as energy prices retreated after a big gain in August.

The Labor Department said Thursday that the September gain in its closely watched consumer price index followed a 0.2 percent rise in August. It was the smallest monthly gain since June.

Inflation has been on a slight rise this year after a prolonged stretch when prices kept falling below the 2 percent target set by the Federal Reserve. For the 12 months ending in September, consumer prices were up 2.3 percent.

Core inflation, which excludes volatile energy and food costs, rose 0.1 percent in September, the same level as in August. It is up 2.2 percent over the past year.

The Federal Reserve has raised interest rates three times this year and signaled that it will raise rates one more time in 2018 in an effort to make sure that a strong economy and low unemployment do not trigger an unwanted rise in inflation. The jobless rate fell to a 49-year low of 3.7 percent in September.

Economists said they believed inflation will accelerate further in coming months, reflecting a strong economy being propelled by tax cuts and employment gains.

"Barring a rapid escalation of trade tensions that would disrupt economic activity, we foresee another Fed rate hike before the end of the year," said Gregory Daco, chief U.S. economist at Oxford Economics. He predicted the Fed would raise rates another three times in 2019 in an effort to make sure price pressures do not get out of hand.

President Donald Trump, however, has stepped up his criticism of the Fed's rate hikes, calling them unwarranted. Rising interest rates were one of the factors blamed for the big sell-off on Wall Street this week.

Trump, who has often pointed to the stock market surge as evidence that his economic policies are working, said Wednesday that the Fed had "gone crazy" raising short-term interest rates.

"The Fed is making a mistake. They're so tight," Trump told reporters before a campaign rally in Pennsylvania on Wednesday evening.

It marked Trump's latest attack in a string of criticism that began in the summer. Fed Chairman Jerome Powell, who took over the top Fed job in February, has not responded directly to Trump's attacks other than to say that the central bank believed its policy of gradual rate increases marked the best approach to extending the current recovery and making sure inflation does not become a problem.

So far, inflation, while higher than it has been, is remaining close to the Fed's target of 2 percent annual price increases. But some economists worry that with labor markets so tight, wage gains will start to accelerate, forcing businesses to charge more for their products.

For September, energy prices fell 0.5 percent after a 1.9 percent surge in August. Food costs were flat in September after a tiny 0.1 percent rise in August.

Airline fares were up 1 percent in September, though this was offset by a big 3 percent drop in used car prices. New car and truck prices fell a slight 0.1 percent.

The Social Security Administration announced that millions of recipients of Social Security and other government benefits will receive a 2.8 percent increase in their monthly payments starting in January. That will be the biggest cost-of-living increase in seven years. The adjustment is based on the third quarter average for consumer prices this year compared to the third quarter of 2017.