Inflation in the United States ticked up to 3% in September, up from 2.9% reported in August. This figure is still well above the US central bank’s 2% target inflation rate. In the UK, inflation has added to the mix, making a difficult situation more complicated. Just last month, the Bank of England raised interest rates to a 16-year high of 5.25% to combat soaring inflation that has repeatedly eclipsed its target. These developments, along with other recent trends, underscore the deep and continuing economic impact of the pandemic on both countries.
The Consumer Prices Index (CPI) is the UK Government’s primary measure of inflation. Each month, detailed new statistics are made public to keep their public informed. The Office for National Statistics (ONS) goes to great lengths every month to ensure accurate measurement and reporting. This impacts critical supplies such as food and fuel. In September 2023, the year-over-year CPI was 3.8%, in line with the July and August reports.
Over the past few years, inflation rates have shown tremendous unpredictability. In October 2022, inflation in the UK reached a shockingly high peak of 11.1%. And with the end of the Covid pandemic came a dramatic global increase in the demand for oil and gas. This trend was compounded by the surge in energy costs after Russia’s invasion of Ukraine. The impact of these happenings still shapes today’s economic landscape.
Looking below the surface at food prices shows some complicated trends. As of August 2023, food price inflation increased for the fifth straight month up to 5.1%. Meanwhile, at least for food and non-alcoholic beverages there was a marked reduction in the inflation rate by September, going down to 4.5%. These ups and downs highlight the challenges that go into addressing inflationary pressures on goods that are necessities.
To better understand inflation trends, look at core inflation. This measure excludes volatile elements, like food and energy costs, to give a better long-term picture of price movements. The CPI excluding food and energy—often referred to as core CPI—came in at 3.5% for the 12 months ending in September. That’s down just a tick from the 3.6% rate in August. This measure supports central banks in better assessing underlying inflation trends and taking well-informed interest rate decisions.
Eurozone inflation trends are showing a dramatic shift. In September, countries that share the euro experienced an inflation rate of 2.2%, a slight increase from a 2% in August. This shift is emblematic of underlying economic trends affecting all areas, from small rural towns to large cities.
In the United States, changes to inflation measurement are key to capturing today’s shopping patterns. That virtual “basket of goods” becomes essential for determining inflation. We try to keep it updated with items that are more in line with today’s consumer tastes. Since 2025, we have entered virtual reality headsets and yoga mats into the basket. Simultaneously, we eliminated advertisements in local community newspapers, pointing to a blatant movement from print to digital in how people consume content.
The Federal Reserve’s all stick, no carrot approach to inflation has been informed by these evolving metrics. The monetary authority is addressing long-standing issues. It is equally as fierce in its resolve to bring inflation down to its target rate of 2%. The recent uptick to 3% underscores the difficulty of achieving this goal amidst fluctuating consumer behaviors and external economic pressures.
Historically, inflation had a very different path before the pandemic. In January 2020, the US had an inflation rate of only 1.8%. This dismally low figure somehow highlighted a period of relative calm before the economic storm that just upended the country. On the other side of the pandemic, things have been just as rocky for consumers and policymakers.