For the first time since January, the United States saw a substantial jump in inflation, reaching 3%. Consumer prices increased sharply for the 12 months ending in September. This marks a 0.21% increase, following an all-time low of 2.9% last month. Analysts had expected a somewhat larger gain, with estimates anticipating an increase to 3.1%. The new report makes headlines as it is the first official economic data from the US federal government. This release follows the latest shutdown that occurred just at the start of this month.
On a monthly basis, from August to September, consumer prices increased by 0.3%. This 0.3% increase represents a small moderation from March’s 0.4% increase. This small increase reflects continued pressures on consumer spending in an uncertain economic environment with rising interest rates.
Furniture and furnishings jumped 3.5 percent. They had jumped 3.8% over the last year and were up 0.9% from August to September. Housing, in the form of rents, played a major role in heating up the inflation number, with rents rising 3.5% year-over-year, matching last month’s data.
Food prices reflected significant changes as well. Beef prices have skyrocketed more than 14% just since last September of 2022. In the background, coffee prices have gone even higher and up nearly 19%. These price shocks on basic commodities are just the latest reminder that consumers are still struggling with high costs of living.
As the US central bank prepares to meet again on potential interest rate cuts, thrift efforts are heating up. Together, these reforms could lower inflation by billions. Olu Sonola, the head of US economic research for Fitch Ratings, contributed analysis on what’s unfolding. On the bright side, that means the tariff pass-through is still overall pretty muted. It may sound crazy, but you should be happy if you’re the Fed that inflation stays around 3% for the next several months. They see this as a win. This should re-instill market confidence that the Federal Reserve does not believe today’s inflationary episode is overly problematic in the near future.