The U.S. annual inflation rate came in at 8.2 percent in September, down from 8.3 percent in August, according to the latest data from the Bureau of Labor Statistics. This was higher than the market expectation of 8.1 percent.
Core inflation, which strips the volatile food and energy sectors, advanced to a 6.6 percent annual rate, a new four-decade high. This was up from 6.3 percent in August and higher than the market forecast of 6.5 percent.
On a monthly basis, the consumer price index (CPI) rose 0.4 percent, while the core CPI surged 0.6 percent.
The major contributors to September inflation were increases in the shelter, food, and medical care costs.
According to BLS data, a sustained rise in food costs continues to inflate the headline figure. The food index gained 0.8 percent in September, the same as in August, and was up 11.2 percent year on year.
The shelter index, which is closely watched, went up by 0.7 percent in September, which was also the same as in August. The rent index rose 0.8 percent in September and 6.7 percent year-over-year.
And the medical care costs rose 1 percent last month, after rising 0.8 percent in August.
The latest inflation data have exacerbated real wage growth (inflation-adjusted), which has been negative for 18 months. The change in real average hourly earnings, combined with a 0.9 percent drop in the average workweek, is now negative 3.8 percent.
Investors have been keeping a close eye on inflation readings as they might offer hints on whether the U.S. central bank could pivot on monetary policy.
With inflation at these levels, some investors are concerned about the Federal Reserve’s ability to control surging prices.
Speaking at the Institute of International Finance’s annual membership meeting on Oct. 12, Larry Fink, chairman and CEO of BlackRock, warned that the central banks around the world have to use “a hammer more frequently.”
By Andrew Moran and Emel Akan
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