With No Sign of Slowing Down, Inflation Spiked More Than Expected in September
Weekly jobless claims are also on the rise, the Labor Department reports
People shop in a supermarket as rising inflation affects consumer prices in Los Angeles, California, U.S., June 13, 2022. REUTERS/Lucy Nicholson Reuters • October 13, 2022 10:20 am
WASHINGTON (Reuters)—U.S consumer prices increased more than expected in September and underlying inflation pressures continued to build up, reinforcing expectations that the Federal Reserve will deliver a fourth 75-basis points interest rate hike next month.
The consumer price index rose 0.4% last month after gaining 0.1% in August, the Labor Department said on Thursday. Economists polled by Reuters had forecast the CPI climbing 0.2%.
In the 12 months through September, the CPI increased 8.2% after rising 8.3% in August. The annual CPI peaked at 9.1% in June, which was the biggest advance since November 1981.
Despite the continued moderation as supply chains ease and oil prices retreat from the highs seen in the spring, inflation is running way above the Fed’s 2% target.
Gasoline prices have likely bottomed following last week’s decision by the Organization of Petroleum Exporting Countries and allies to cut oil production. Russia’s war against Ukraine poses an upside risk to food prices.
Stubbornly high inflation and a tight labor market allow the U.S. central bank to maintain its aggressive monetary policy stance for a while. The government last week reported solid job growth in September, with the unemployment rate falling back to a pre-pandemic low of 3.5% from 3.7% in August.
Financial markets have almost priced in another three-quarters of a percentage point rate increase at the Fed’s Nov. 1-2 policy meeting, according to CME’s FedWatch Tool.
The Fed has since March hiked its policy rate from near zero to the current range of 3.00% to 3.25%. Minutes of the Fed’s Sept. 20-21 meeting published on Wednesday showed policymakers “expected inflation pressures to persist in the near term.”
Excluding the volatile food and energy components, the CPI climbed 0.6% in September after rising 0.6% in August. The so-called core CPI jumped 6.6% in the 12 months through
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