Consumer Price Index Spikes Again In September, Fueled By Rising Food, Energy Costs
Inflation spiked again in September after rises in food and energy prices outpaced declines in other categories, the Department of Labor reported on Wednesday.
In the new data from the Bureau of Labor Statistics, the price of food rose 0.9% and energy prices saw a higher growth at 1.3%. The Consumer Price Index (CPI), a primary benchmark for gauging inflation, rose for all items to 0.4%, beating the August measurement of 0.3% as well as outside estimates that expected the same result.
Food and energy prices are considered the most volatile measurements used for gauging inflation, but their rise in September prompts questions about whether inflation in the U.S. is transitory or here to stay awhile longer. In a worrying sign for policymakers, the year-on-year inflation recorded was 5.4%, the highest since January 1991.
If food and energy prices are excluded from the CPI, the rise was 0.2% and annual inflation is 4%. Declines in prices were seen in used cars and airline fares.
Used car prices began falling in August after reaching a peak at the start of the summer. Airline fares fell 6.4%, continuing another trend from the previous month that saw a larger drop of 9.1%.
The new inflation numbers will be an important indicator for decision-makers at the Federal Reserve and within President Joe Biden’s administration as they keep their finger on the pulse of the economy.
The Fed acknowledges that inflation has been going up but claim it remains transitory, as said by Chairman Jerome Powell in August at Jackson Hole's annuel retreat for central bankers.
For the Fed, maintaining low inflation around a benchmark of 2% annually has been its goal. A sharp or persistent rise in inflation could force the Fed’s hand in acting sooner than it may want in raising interest rates.
While Fed officials expect to reduce the $120 billion per month worth of asset purchases starting next month, it has been less specific about when it may raise interest rates from their current lows.
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