CPI Data Shows Consumer prices rose 0.4% in September, more than expected


The Consumer Price Index (CPI), a measure of inflation, held steady at 3.7% on a yearly basis in September, the US Bureau of Labor Statistics (BLS) reported on Thursday. This reading matched the August print and came in slightly above the market expectation of 3.6%. The annual Core CPI, which excludes volatile food and energy prices, rose 4.1% in September to meet analysts’ estimates. On a monthly basis, the CPI and the Core CPI increased 0.4% and 0.3%, respectively.

In keeping with recent trends, shelter costs were the main factor in the inflation increase. The index for shelter, which makes up about one-third of the CPI weighting, accelerated 0.6% for the month and 7.2% from a year ago. “The index for shelter was the largest contributor to the monthly all items increase, accounting for over half of the increase,” the BLS noted in its press release. “An increase in the gasoline index was also a major contributor to the all items monthly rise.”

Markets showed a modest reaction to the report. The US Dollar gained strength against its major rivals with the immediate reaction. As of writing, the US Dollar Index was up 0.3% on the day at 106.05. Stock market futures were off their highs but still mostly positive while Treasury yields came off previous lows, with longer-duration notes little changed.

The Real average hourly earnings fell 0.2% on the month. Though on a yearly basis, earnings were up 0.5%.

With the CPI report comes further contemplation on what we can expect for the coming days . The FOMC Minutes Meetings concluded with the opting not to raise interest rates, but the concerns over inflation still remain . Ever since, Treasury yields shot up and reached 16-year highs. Fed officials suspect that the increases could negate the need for policy tightening and there are only minute chances now that the central bank votes to hike before the end of the year. Oil prices continued to push higher in September, with the barrel of West Texas Intermediate gaining 9% on a monthly basis. Even though there was a sharp decline in crude Oil prices in the first week of October, the reignited conflict between Israel and Hamas could cause energy costs to remain elevated in the near term.

Overall, the CPI data is a mixed bag. It is good news that inflation is slowing, but it is still above the Fed’s target. This suggests that the Fed may need to continue raising interest rates, which could slow economic growth. Consumers can help to protect themselves from inflation by budgeting carefully and shopping around for the best deals.