US consumer prices rise on gasoline and shelter costs in September
WASHINGTON (Reuters) — 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% last month, the Labor Department said on Thursday. The CPI jumped 0.6% in August, which was the largest increase in 14 months.
In the 12 months through September, the CPI advanced 3.7% after rising by the same margin in August. Year-on-year consumer prices have come down from a peak of 9.1% in June 2022.
Economists polled by Reuters had forecast the CPI gaining 0.3% and climbing 3.6% year-on-year.
Excluding the volatile food and energy components, the CPI rose 0.3%. Used motor vehicle prices fell, but the cost of shelter increased amid costly rents. The so-called core CPI increased 0.3% in August.
The core CPI gained 4.1% year-on-year in September after advancing 4.3% in August. The government reported on Wednesday that producer prices increased 0.5% 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 2% 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 (NASDAQ:CME) 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.
Violence in the Middle East is also seen discouraging the Fed from tightening
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