September Inflation - Hotter than Expected; Core on the Rise

On the heels of last week’s solid jobs report, September inflation data came in hotter than expected this morning likely cementing another 0.75% Fed rate increase next month.  While policymakers have responded to elevated inflation with the fastest hiking cycle in over 30 years, the labor market and consumer demand have remained resilient.   The Consumer Price Index rose 8.2% from a year earlier, down from 8.3% in August a peak of 9.1% in June, but higher than expected.  Core CPI rose 6.6% year over year – the highest level since 1982.

• Consumer prices (CPI) increased 8.2% year-over-year.  In September, the consumer price index (CPI) increased 8.2% compared to the same period a year ago, decelerating slightly from 8.3% in August.  Expectations ranged from 7.9% to 8.3% with a median of 8.1%.  Core CPI (excludes food and energy) increased 6.6% year-over-year, accelerating from 6.3% in August and notching a new 40-year high.  While price increases were broad-based, energy costs (+20%) and food (+11%) were among the larger contributors to the year-over-year change.
• Consumer prices (CPI) increased 0.4% month-over-month.  In September, consumer prices increased 0.4% compared to August.  Expectations ranged from -0.1% to +0.4% with a median of +0.2%.  Lower energy costs (-2%) led by falling gasoline prices (-5%) were more than offset by higher food and shelter costs for the month.  Shelter costs, which represent nearly one third of the consumer price index and tend to increase with a lag, increased 0.7% for the second month in a row, up from the 0.5% pace seen over previous six months.  Core CPI (excludes food and energy) increased 0.6% compared to August.