Inflation ran hotter than expected in September as high prices continued to squeeze U.S. households. Consumer prices rose 0.4% in September and were up 8.2% from a year ago, according to BLS data released Thursday. Those figures were both higher than the 8.1% headline figure and 0.2% monthly increase forecast by Refinitiv economists. Excluding food and energy, the core consumer price index accelerated 0.6% and 6.6%, respectively. The yearly gain for core was the highest since August 1982.
Megan Henney for FOX Business:
Scorching-hot inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily impacted by price fluctuations.
The cost of groceries climbed 0.7% [month-over-month], putting the 12-month increase at 13.0%. Consumers paid more for items like cereal, chicken, milk and fresh vegetables.
The report will also have significant implications for the Federal Reserve, which has embarked on one of the fastest tightening paths in decades. Policymakers have already approved five straight rate hikes, including three back-to-back 75 basis point increases, and have shown no signs of slowing down.
Following the hotter-than-expected September inflation report, the central bank is widely expected to approve a fourth straight 75 basis point increase when policymakers next meet at the beginning of November.
“CPI came in hot, which virtually guarantees the Fed will hike 75 basis points next month, and at least 50 in December,” said Robert Frick, corporate economist with Navy Federal Credit Union. “And we need to brace for more bad news in October and November, as rising oil prices are likely to swing again from reducing to increasing inflation.”
The report rattled financial markets, with stock market futures plunging and Treasury yields moving up as traders priced in likely more aggressive interest rate hikes ahead from the Federal Reserve.
“The Federal Reserve has made it very clear they’re committed to price stability, they’re committed to reducing the inflationary pressures,” said Michelle Meyer, chief U.S. economist at the Mastercard Economics Institute. “The more inflation comes in above expectations, the more they’re going to have to prove that commitment, which means higher interest rates and cooling in the underlying economy.”
Closely watched shelter costs, which make up about one-third of CPI, rose 0.7% and are up 6.6% from a year ago. Transportation services also showed a big bump, increasing 1.9% on the month and 14.6% on an annual basis. Medical care costs rose 1% in September.
The rising costs meant more bad news for workers, whose average hourly earnings declined 0.1% for the month on an inflation-adjusted basis and are off 3% from a year ago, according to a separate BLS release.
MacDailyNews Take: For those who are looking for nice deals and safe harbors in tech stocks, the fact remains:
Apple iPhone customers are the most recession-proof smartphone buyers. — MacDailyNews, September 7, 2022
Again, when certain quarters, including the Fed, delude themselves and others that “inflation is transitory” and waste at least a year before doing a mere portion of what is necessary* (interest rate hikes), the price will be paid for being delusional and late.
Catching up will be difficult. But, hey, good luck on that soft landing. 🙄 – MacDailyNews, September 13, 2022
In January, Interactive Brokers founder Thomas Peterffy said of the U.S. Federal Reserve, “If they really wanted to stop inflation, they would have to raise rates to 4%, 5%, 6%.”
The Fed’s current target interest rate range is 3.00% to 3.25%. Peterffy may have been too conservative. Rates in excess of 6% may be required at this point.
‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021
*Stop the misguided crusade against domestic energy production and profligate federal spending and inflation will be stopped dead in its tracks. It’s not difficult. – MacDailyNews, May 11, 2022
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