CPI Inflation Worse Than Expected Last Month—But Still At 2.5-Year Low In Last Pre-Election Report
by Derek Saul · ForbesTopline
Consumer prices rose faster than economists forecasted last month for the first time since March, posing a potential obstacle to the yearslong fight to return to 2% inflation.
Key Facts
Headline consumer price index inflation was 2.4% in September, according to Bureau of Labor Statistics data released Thursday morning.
The 2.4% year-over-year increase in the index compares to average economist forecasts of 2.3% headline inflation, according to FactSet data.
It’s still the lowest inflation rate since Feb. 2021, besting August’s 2.5%.
Core CPI inflation, arguably the more important metric for policymakers as it excludes the more fickle food and energy sub indexes, was 3.3% last month, compared to projections of 3.2%, where it also stood in July and August.
The 0.2% month-over-month increase in headline inflation compares to estimates of 0.1%, and a 0.3% jump in core inflation compares to forecasts of 0.2%.
Key Background
Headline CPI inflation was lower or the same as expected for the prior five months, dating back to March. Though core inflation has moderated, it’s historically elevated, as it never eclipsed 3% from 1996 to 2020. CPI measures a basket of goods and services a typical American consumer may purchase in a month, covering price changes in items from eggs to rent. The latest inflation reading comes at a particularly tense time at the Fed, which decided last month to lower interest rates for the first time in more than four years, signaling it is shifting its focus away from an all-hands approach to combat inflation to balance risks of slowing economic growth. Inflation peaked in the U.S. at a 41-year-high of 9.1% in June 2022, as consumers globally grappled with price increases tied to the COVID-19 pandemic, Russia’s invasion of Ukraine and stimulatory monetary policies.
Tangent
This was the last CPI report before Election Day as inflation dwells on the mind of many voters. Since Jan. 2021, when Joe Biden took office, the index has climbed 20.1%, equating to 5.5% annualized inflation, signaling the extended pain many Americans feel even as 12-month inflation rates slow to historically normal levels.
This is a breaking news story and will be updated…