Core inflation unexpectedly jumps.
Inflation came in slightly higher than economists’ expectations as food and shelter costs rose in September.
According to the Bureau of Labor Statistics, the annual inflation rate slowed to 2.4 percent last month, down from 2.5 percent in August. This was above the market estimate of 2.3 percent.
The consumer price index (CPI) jumped at a higher-than-expected pace of 0.2 percent monthly.
Core inflation, which excludes volatile energy and food categories, rose to 3.3 percent in September, up from 3.2 percent the previous month. This was also higher than the consensus estimate of 3.2 percent and represented the first increase since March 2023.
The core CPI also increased at a higher-than-expected rate of 0.3 percent monthly, unchanged from August.
The food index surged by 0.4 percent from August to September, and supermarket prices increased by 0.4 percent. Five of the six major grocery store food group indexes jumped, led by the meats, poultry, fish, and eggs category, which climbed by 0.8 percent. Eggs, looked at alone, rocketed by more than 8 percent. Fruits and vegetables advanced by 0.9 percent.
Food away from home also rose by 0.3 percent, with full-service meals (restaurant) and limited-service meals (fast food) increasing by 0.4 percent and 0.2 percent, respectively.
Shelter inflation continues to be elevated as U.S. home prices and rents remain at or slightly below record highs.
The index increased by 0.2 percent monthly and decelerated to just below 5 percent year over year, signaling that broader housing cost pressures might be easing. The indexes for owners’ equivalent rent and rent both rose to 0.3 percent over the month.
Despite expectations among policymakers and economists that shelter costs would ease by now, Federal Reserve Chair Jerome Powell accepted that he “misjudged” housing inflation and warned that it will persist for “some years.”
At the September post-meeting news conference, Powell told reporters that high home prices are not “something the Fed can really fix.”
In September, energy prices plunged by 1.9 percent as gasoline and fuel oil plummeted by 4 percent and 4.1 percent, respectively. Electricity costs rose to 0.7 percent.
