U.S. inflation rose on gas and shelter costs in September

globalnews.ca:

U.S. consumer prices increased in September amid higher costs for rent and gasoline, but underlying inflation is slowing, supporting financial market expectations that the Federal Reserve would not raise interest rates next month.

The consumer price index increased 0.4 per cent last month, the Labor Department said on Thursday. The CPI jumped 0.6 per cent in August, which was the largest increase in 14 months.

In the 12 months through September, the CPI advanced 3.7 per cent after rising by the same margin in August. Year-on-year consumer prices have come down from a peak of 9.1 per cent in June 2022.

Economists polled by Reuters had forecast the CPI gaining 0.3 per cent and climbing 3.6 per cent year-on-year.

Excluding the volatile food and energy components, the CPI rose 0.3 per cent. Used motor vehicle prices fell, but the cost of shelter increased amid costly rents. The so-called core CPI increased 0.3 per cent in August.

The core CPI gained 4.1 per cent year-on-year in September after advancing 4.3 per cent in August. The government reported on Wednesday that producer prices increased 0.5 per cent in September, lifted by higher gasoline and food prices, though underlying inflation pressures at the factory gate continued to abate.

Inflation remains above the Fed’s two per cent target, 18 months after the U.S. central bank started hiking rates.

Financial markets overwhelmingly anticipate the Fed will leave rates unchanged at its Oct. 31-Nov. 1 policy meeting, according to CME Group’s FedWatch Tool. That conviction found support from comments by top ranking Fed officials on Monday that soaring yields on long-term U.S. government bonds could steer the central bank away from further rate hikes.

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