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Inflation in the United States accelerated in September, with the cost of housing and other necessities intensifying pressure on households, wiping out pay gains and ensuring that the Federal Reserve will keep raising interest rates aggressively.
Consumer prices, excluding volatile food and energy costs, jumped 6.6 per cent in September from a year ago the fastest such pace in four decades.
And on a month-to-month basis, such core prices soared 0.6 per cent for a second straight time, defying expectations for a slowdown and signalling that the Fed’s multiple rate hikes have yet to ease inflation pressures. Core prices typically provide a clearer picture of underlying price trends.
Overall prices rose 8.2 per cent in September compared with a year earlier, down slightly from August, the government said on Thursday in its monthly inflation report. But from August to September, prices increased 0.4 per cent, faster than the July-to-August increase.
Though cheaper gas helped slow the broadest measure of inflation, costlier food, medical care and housing pointed to the breadth of price pressures across the economy.
We still have no evidence that inflation is decelerating, said Matthew Luzzetti, an economist at Deutsche Bank. Let alone the clear and convincing evidence that the Fed is looking for.
Stock markets fell sharply in early trading, but then rebounded and moved higher. The Dow Jones was up 560 points, or 1.9 per cent, in mid-day trading.
Thursday’s report represents the final US inflation figures before the November 8 midterm elections after a campaign season in which spiking prices have fuelled public anxiety, with many Republicans casting blame on President Joe Biden and congressional Democrats.
Speaking on Thursday in Los Angeles, Biden acknowledged the pain that inflation is causing many people, while suggesting that the latest figures showed some progress“.
Americans are squeezed by the cost of living, the president said. It’s been true for years, and folks don’t need to read a report to tell them they’re being squeezed. Fighting this battle every day is a key reason why I ran for president.
Even with widespread price spikes, the September data showed that the prices for many physical goods, including clothing, used cars, furniture, and appliances, dropped last month.
A key factor is that supply chain snarls have eased, and many large retailers such as WalMart and Target have discounted some items to clear excess stockpiles.
Yet the price drops were not as steep as many economists expected, and they were more than offset by sharp increases in services prices, including health care, auto repair and housing.
