Measures of U.S. inflation in September showed that the pace of price increases is still grinding lower, though at a slow and uneven pace.
Prices in the United States increased 0.4 per cent from August to September, a slowdown from the previous month. Thursday’s report from the Labour Department also showed that annual consumer inflation in September was unchanged from a 3.7 per cent rise in August.
And underlying inflation declined a bit: So-called core prices, which exclude volatile food and energy costs, climbed 4.1 per cent in September from 12 months earlier, down from a 4.3 per cent year-over-year pace in August. That is the smallest increase in the core measure in two years.
Still, on a month-to-month basis, prices are still rising faster than is consistent with the Fed’s 2 per cent target. Core prices increased 0.3 per cent in September, the same as the previous month.
Economists and Fed officials have long cautioned that inflation would likely ease in a bumpy and uneven way, though it is still expected to keep slowing into 2024. Thursday’s inflation data follows several speeches this week by Fed officials suggesting that they are inclined to leave their benchmark interest rate unchanged at their next meeting Oct. 31- Nov. 1.
Longer-term interest rates have spiked since the Fed’s policymakers last raised their key rate in July. Those higher long-term bond rates have led to more expensive mortgages, auto loans and business borrowing, a trend that could help cool inflation pressures without further Fed rate hikes.
Several factors have combined to force up longer-term rates. They include the belated acceptance by financial markets of the likelihood that the economy will remain on firm footing and avoid a recession.
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