By Jeff Cox, CNBC.com Senior Writer
NEW YORK ( CNBC) -- The good news for consumers is that gasoline prices are on a steady pattern lower. The bad news is you can't eat gas. So even as the pressure at the pump likely will continue to ease in the months ahead, economists believe it will be offset by a rise in food prices, which face a variety of pressures that will make inflation a lingering headache. "Any benefit from lower energy prices will be absorbed by higher food and core inflation," Deutsche Bank economist Carl Riccadonna said in a recent analysis. "While some policymakers, including (Federal Reserve) Chairman (Ben) Bernanke, remain optimistic that transitory inflation pressures will recede in the coming months, we are less confident that such a development will occur."
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At the same time, gas came off just slightly, dropping two cents a gallon for regular unleaded but seeing a huge annualized increase of 32%. Gas, however, tumbled from August to September (data not included in the BLS figures) to show a 6.5% drop. The most recent Consumer Price Index reading showed continued upward pressure. The food index rose 0.5% in August on top of a 0.4% gain in July. Food price pressures are causing concern on a global basis as well, as the world's economy slows and fears grow that poverty will be exacerbated from the various factors pushing costs higher. "Demand from consumers in rapidly growing economies will increase, population will continue to grow, and further growth in biofuels will place additional demands on the food system," the United Nations Food and Agriculture Organization said in a report issued a few days ago. "On the supply side, there are challenges due to increasingly scarce natural resources in some regions, as well as declining rates of yield growth for some commodities," the FAO added. "Food price volatility may increase due to stronger linkages between agricultural and energy markets, as well as an increased frequency of weather shocks." Indeed, energy prices remain high despite the pullback and will provide only limited help. Some economists, particularly at the Fed, tend to be dismissive of food prices as an inflation indicator as they are considered highly volatile and thus not included in the "core" reading the government puts out each month, a number currently at 1.9%. But with headline inflation nearing 4% and food at 4.6% on an annualized basis, the trend will be hard to ignore. "Policymakers' resolve may be tested as seemingly 'transitory' inflation pressures prove to be more resilient due to rising food costs," Deutsche's Riccadonna said. "Policymakers may tend to focus on the core, but food inflation should not be ignored." -- Written by Jeff Cox, CNBC.com Senior Writer