Consumer prices up just 0.2% in September

Higher energy costs contributed to much of the only slight increase in consumer prices last month, while food prices stayed relatively the same.

The consumer price index rose a seasonally adjusted 0.2% in September, the Labor Department said Wednesday. That's up from 0.1% in August. Higher gas, electricity and other energy costs rose 0.8%, making up about half the overall increase. The figures are the latest evidence that slow economic growth is keeping inflation tame.

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In the past year, consumer prices have increased just 1.2%. That's down from the annual gain of 1.5% as of August and the smallest 12-month gain since April.

Excluding volatile food and energy costs, core prices rose just 0.1% and are up 1.7% in the past 12 months.

With unemployment still relatively high and wage increases nearly flat, many Americans continue to struggle to pay more for most goods, making it harder in turn for retailers to charge more.

With inflation below the Fed's target of 2%, the central bank faces less pressure to scale back its $85 billion-a-month in bond purchases. The bond purchases are intended to keep long-term inflation rates low and stimulate economic growth. But critics fear it raises the risk of higher inflation.

Extremely low inflation may even increase pressure on the Fed to extend the purchases. Some Fed officials have objected to slowing the bond-buying program when inflation is well below 2%. A small amount of inflation can be good for the economy because it encourages consumers and businesses to spend and invest before prices rise further.

Paul Dales, an economist at Capital Economics, says price gains have picked up in the past few months, a sign "the Fed needn't worry too much about low inflation."

Prices for clothing and hotels fell, while airline fares, new car prices, and rents rose. Fruit and vegetable prices dropped, offsetting increases in meat, breads and dairy products.

The government shutdown! likely slowed growth in an already weak economy. Economists expect economic growth at an annual rate of between 1.5% and 2% from July through September. That would be down from a 2.5% annual rate in the April-June quarter.

And economists expect little pickup in the October-December quarter. The shutdown likely cut a quarter- to a half-percentage point from growth in the final three months of the year.

Contributing: Associated Press