U.S. inflation reached 3% in September, marking its highest level since January. This figure indicates an increase in consumer prices from 2.9% in the previous month, according to the Labor Department. Analysts had projected a 3.1% increase, suggesting that the actual inflation rate was milder than anticipated.
This report is significant as it is the first official economic data released by the U.S. government following a recent shutdown. It arrives just before the upcoming vote by the U.S. central bank on potential interest rate cuts, and it seems to support expectations that policymakers may decide to reduce borrowing costs.
From August to September, prices increased by 0.3%, showing a slight moderation from the 0.4% rise recorded in the prior month. Olu Sonola, head of U.S. economic research for Fitch Ratings, noted that the pass-through effect of tariffs remains subdued, which may be seen as a positive sign for the Federal Reserve. He suggested that maintaining inflation around the 3% level for the next few months could be favorable for the Fed.
The Federal Reserve typically raises interest rates to stabilize prices and lowers them to stimulate economic activity. Currently, it is addressing an economy that exhibits both slowing job growth and rising prices that exceed its 2% target. For instance, furniture prices rose by 3.8% over the 12 months leading to September, with a 0.9% increase from the previous month.
Despite the uptick in inflation, the overall increase has been less than analysts had forecast. This can be attributed to businesses being cautious about fully passing costs from new border taxes onto consumers. The Labor Department recalled employees who had been on unpaid leave due to the government shutdown to assist with the publication of this report, which is also used to adjust cost-of-living allowances for Social Security. Various categories reflected price increases, notably in some food items, with beef prices surging over 14% since September 2024 and coffee prices rising nearly 19%. Additionally, rent prices increased by 3.5% during the same period, consistent with prior rates.
Source: https://www.bbc.com/news/articles/cgkzgrmvdrno?at_medium=RSS&at_campaign=rss