The rate of inflation rose by 0.4% in September, and remains well above its benchmark target of 2%, making the prospect of continued “jumbo” interest rate hikes more likely.
The year-over-year rate of inflation is now 8.2%, down from 8.3% in August, according to the Labor Department’s Consumer Price Index, which measures how much Americans pay for certain goods and services.
That is slightly higher than many forecasts, including a Bloomberg survey of 51 economists that predicted a year-over-year inflation rate of about 8.1%.
With inflation, “any deceleration is welcome,” says Mark Hamrick, senior economic analyst at Bankrate.com. However, this month’s higher-than-expected inflation numbers are a “tremendously unwelcome negative surprise.”
The prices for core goods continue to rise steadily, increasing by 0.6%, which is the same rate as the previous month. Core goods is a measure of all items except food and energy prices, which tend to be more volatile.
The rising cost of shelter, which is based on rent levels rather than home prices, continues to be a concern, as it accounts for nearly a third of consumers’ costs, as weighted by the CPI.
Last month, the cost of shelter grew by 0.7%, and has risen 6.6% year over year. Prior to the pandemic, the yearly rise in shelter tended to hover somewhere between 2% and 4%.
Another factor in September’s elevated inflation rate is food costs, which increased 0.8%, the same rate of increase as August.
Here’s how much prices have increased over the past year for certain household goods and services, according to the Labor Department:
- Airline fares: 42.9%
- Gas: 18.2%
- Electricity: 15.5%
- Milk: 15.2%
- Food at home: 13%
- New vehicles: 9.4%
- Used cars and trucks: 7.2%
- Medical care services: 6.0%
- Apparel: 5.5%
- Postage: 3%
By Mike Winters