MNI ANALYSIS: US Sept Retail Sales Jump 1.6%; CPI +0.5%>

--Core CPI +0.1% M/M; Overall CPI +2.2% Y/Y, Core +1.7%

--September Retail Sales +1.0% Ex. Mtr Veh; Ex. MV, Gas, Bldg Mat +0.4%

By Kevin Kastner and Holly Stokes

     WASHINGTON (MNI) - The value of retail sales rose 1.6% in September 

and were up 1.0% excluding motor vehicle sales following upward 

revisions in July and August, data released by the Commerce Department 

Friday morning shows. 

     September motor vehicle posted a 3.6% gain in the month, bouncing 

off a 2.1% drop in the previous month. Excluding motor vehicles, 

gasoline, and building materials, "core" retail sales were up 0.4%. And 

for good measure, excluding food services as well as those three 

measures, retail sales were still up 0.4%. 

     Motor vehicles, gas, and building materials accounted for much of 

the strength in report, as would be expected as rebuilding and 

replacement of damaged homes and vehicles began. The Commerce Department 

provided no comment on the impact of the hurricanes in the report. 

     At the same time, the BLS'S Consumer Price Index rose 0.5%, 

slightly below expectations for a 0.6% gain, while core CPI rose only 

0.1% compared with a 0.2% expected gain, 

     BLS said that it could not quantify the exact impact of the 

hurricanes on the CPI data, but said there was a small impact on data 

collection in Florida due to Hurricane Irma. 

     Within core CPI, owners equivalent rents rose 0.2%, while the 

lodging away from home category rose 1.5%. Prices of new vehicles were 

down 0.4% while medical care prices fell 0.1%. 

     Energy prices surged 6.1% in the month, with a 13.1% rise in 

gasoline prices and an 8.2% jump in fuel oil prices. Excluding only 

energy prices, the September CPI would have been up 0.1%. Energy prices 

are likely to rise further in the coming months due to supply shortages 

from the hurricane-impacted regions. Higher gasoline pump prices have 

already been seen in October. 

     Food prices were up 0.1% in September, with food at home were flat 

and food away from home rose 0.3%. The impact of the hurricanes on 

Florida could be seen in rising fruit prices in the future, but that 

category fell 0.2% in October. There were also declines for the meat and 

dairy categories. 

     The year/year rate for overall CPI now stands at 2.2%, up from the 

1.9% rate in August. For core CPI, the year/year rate held steady at 

1.7%. 

     Overall, the CPI data points to contained core consumer inflation, 

with the year/year rate remaining well below the 2% threshold, allowing 

the FOMC to maintain a slow pace of policy tightening. 

     The 3Q/3Q average for the CPI-W, the proxy for the cost of living 

increase for Social Security recipients, rose 2.0%. 

     The retail sales data suggest that third quarter consumption was 

stronger the second quarter average. Incorporating the September surge 

and the upward revisions to July and August, third quarter retail sales 

are up 3.8% at an annual rate from the second quarter average. At the 

same time, sales excluding motor vehicles were up 4.1% from the second 

quarter, while sales excluding motor vehicles, gas and building 

materials were up 2.6% and sales also excluding food services was up 

2.6%. 

     Building materials sales rose 2.1% in September following a 0.6% 

gain in August. Gasoline store sales, meanwhile, surged 5.8% in 

September following a 4.1% rise in August and food services and drinking 

places sales were up 0.8% after a 0.2% August gain. Sales were mixed for 

the other categories, but a 1.0% rise in grocery store sales stood out. 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MAUDS$,MT$$$$,M$U$$$,MAUDR$]