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Inflation in the U.S. inched higher in September, continuing the trend of accelerating prices that began in May. Prices, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), rose 3.0 percent year-over-year in September, a modest increase from the 2.9 percent recorded in August. Core inflation, which excludes the volatile food and energy categories, increased to 2.7 percent from the previous month’s 2.5 percent.
Overall and core inflation (at 3.0 and 2.7 percent respectively) both came in lower than the 3.1 percent expected by economists in a recent Wall Street Journal Survey. The modest increase is likely to put the Federal Reserve in a position to cut interest rates in October, while remaining cautious about additional cuts later in the year.
On a month-over-month basis, the tariff-sensitive categories of apparel and home furnishings played an outsize role in rising prices with inflation rates of 2.6 and 0.6 percent respectively – above the 0.3 percent overall rate for the same period.
Looking at the year-over-year picture, utility gas prices increased by 11.7 percent with strong global demand leading U.S. exports to outpace domestic production. Electricity, used cars, household furnishings, other goods and services, housing, food away from home (i.e. meals at restaurants), and medical care saw price increases of three percent or more. Food at home (i.e. groceries), alcoholic beverages, new vehicles, and education services saw price increases of less than three percent. The price of gasoline and apparel dropped on an annual basis, even as apparel prices increased month-over-month.
Due to the Federal Government shutdown, the Bureau of Labor Statistics is unlikely to report on October inflation data.
Colin Baker
Manager of Economic Research
[email protected]
Clara Richardson
Research Analyst
[email protected]
