Prices are still rising.
You probably knew that, but the latest Consumer Price Index (CPI) report from the U.S. Bureau of Labor Statistics confirmed that prices continued to rise in September.
The CPI rose 0.4% on a seasonally adjusted basis last month, following a 0.1% increase in August, the BLS reported Thursday.
The one sliver of positive news in the report is that, over the 12 months ending in September, the all-items index increased 8.2% before seasonal adjustment; that was down a smidge from an 8.3% annual increase in August and nearly a percentage point below the 9.1% annual rate in June. The 8.2% increase, though, was higher than the 8.1% predicted by economists.
Increases in the shelter, food, and medical care indexes were the largest of many contributors to the monthly increase. They were partly offset by a 4.9% decline in the gasoline index.
The food index continued to rise, increasing 0.8% over the month, as the food at home index rose 0.7%. The shelter index also increased 0.7%. The energy index, however, fell 2.1% over the month as the gasoline index declined, but the natural gas and electricity indexes both increased.
Core inflation, as reported by the index for all items less food and energy, increased 0.6% in September, the same as in August. The indexes for shelter, medical care, motor vehicle insurance, new vehicles, household furnishings and operations, and education were among those that increased month over month. Indexes that declined in September included those for used cars and trucks, apparel, and communication.
Over the past 12 months ending in September, the all-items less food and energy index (core inflation) rose 6.6%, matching economists’ expectations and the largest increase since March. That increase was led by a 19.8% spike in the energy index, though that was smaller than the 23.8% increase for the 12-month period ending August. The food index increased 11.2% over the last year.
The disappointing CPI report follows the release of the minutes from the Federal Reserve's Federal Open Market Committee’s meeting in September, at which the committee voted to raise the benchmark federal funds rate by another 75 basis points. It was the third consecutive 0.75% increase approved by the Fed.
The continued increase in the CPI supports the FOMC’s position that continuing to tighten monetary policy is necessary to bring the inflation rate down to its target rate of 2%.
In the minutes released Wednesday, many committee members said they believe “the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.”
The committee does not meet this month, but is scheduled to meet again on Nov. 1-2, with its final meeting of the year set for Dec. 14-15.
