TrendMacro Chief Investment Officer Don Raskin reacts to the CBS News Vice Presidential Debate on Evening Edit. (Courtesy: CBS News)
Inflation continued to decline in September, hitting its lowest level in three years, but the report was a little more grim than expected.
The Labor Department said Thursday that the Consumer Price Index (CPI), a broad measure of the prices of daily necessities such as gasoline, groceries and rent, rose 0.2% in September from the previous month and 2.4% from a year earlier. did.
Economists surveyed by LSEG expected inflation to rise 0.1% from last month, slowing to an annual rate of 2.3%.
So-called core prices, which exclude more volatile measures for gasoline and food to better assess rising price trends, rose 0.3% month-on-month and 3.3% year-on-year, compared with economists' expectations of 0.2% and 3.2%. It was slightly over %. %, respectively.
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Consumer prices rose slightly more than expected in September, coming in at 2.4%, even as inflation continues to trend toward the Fed's 2% target. (Photo credit: Sha Hanting/China News Service/VCG via Getty Images / Getty Images)
Overall, the report showed signs that inflationary pressures in the U.S. economy continue to ease, although prices remain above the Federal Reserve's 2% target.
High inflation is putting severe economic pressure on most American households, forcing them to pay for necessities like food and rent. For low-income Americans, rising prices are especially devastating. That's because they tend to spend more of their already stretched salaries on necessities, and therefore have less flexibility to save money.
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Most of the core inflation increase in September was due to a 0.2% increase in shelter prices compared to August. Shelter prices rose 4.9% from last year, accounting for more than 65% of the total increase in core inflation, which excludes food and energy, over the past 12 months.
Other areas with notable price increases compared to a year ago included auto insurance (+16.3%), medical (+3.3%), personal care (+2.5%), and apparel (+1.8%). Masu.
Airfares in September increased by 3.2% compared to August. This was slightly slower than the previous month's 3.9% rise, but the year-on-year rate of increase remained at 1.6%.
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Food prices rose 0.4% in September, up 2.3% from a year earlier. (Amy Beth Bennett/South Florida Sun Sentinel/Tribune News Service via Getty Images/Getty Images)
Consumers also experienced higher food prices, which rose 0.4% month-over-month and 2.3% year-over-year. The eating-at-home index also increased by 0.4% from the previous month, but the annual rate of increase was significantly smaller at 1.3%. Food prices outside the home increased by 0.3% month-on-month and by 3.9% year-on-year.
Beef and veal prices are up 4.2% year-on-year, but other types of meat, such as pork (+1.5%) and chicken (+0.5%), have seen smaller price increases over the 12 months. . Ham prices fell 2.5% from the previous year, and seafood prices fell 1.3%. Egg prices have increased by 39.6% on an annual basis, after increasing by 8.4% in September compared to August.
Energy prices fell by 1.9% in September compared to August, and by 6.8% compared to the previous year.
The latest Consumer Price Index (CPI) statistics were released as the Federal Reserve embarks on a campaign to cut interest rates to lower borrowing costs as inflation slows toward its 2% target. The central bank cut interest rates by 50 basis points in September, lowering the benchmark federal funds rate to 4.75%-5% from a range of 5.25%-5.5%.
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Ryan Sweet, chief US economist at the University of Oxford, said: “The stronger-than-expected rise in September's consumer price index does not signal a reacceleration of inflation, and the US Federal Reserve has confirmed that it will not be able to do so at its November meeting.'' It also does not prevent a 25 basis point rate cut.” economy. “The Fed needs to continue normalizing interest rates to put the economy on track for a soft landing.”
Markets increasingly expect the Fed to cut rates by 25 basis points, rather than by a deep 50 basis points. Interest rate traders see an 87% chance that the Fed will cut rates by 25 basis points next month, and a 13% chance that the Fed will leave rates unchanged, according to the CME FedWatch tool. A week ago, markets thought there was a 32% chance of a 50 basis point rate cut, indicating there was no chance the Fed would hold off on cutting rates, given last week's jobs report and the latest inflation data.
Manager Chris Larkin said: “While the slightly better-than-expected CPI data does not mean a new wave of inflation has arrived, the fact that it was accompanied by a sharp increase in weekly unemployment claims does suggest a short-term outlook.'' “This could increase market uncertainty.” Director of Trading and Investments at E*Trade, formerly of Morgan Stanley. “We live in a 'good news is good, bad news is bad' environment, and while these numbers were not good by any means, they do mean overturning the great outlook for solid economic growth and moderate inflation. isn't it.”
The Fed's next policy meeting will be held on November 6-7, immediately after Election Day on November 5.
