Hotter-than-expected September inflation readings at both the consumer and wholesale level have strengthened the case for a second Fed rate hike ahead of the late October meeting.
- The consumer price report showed prices rose 0.6% in September, lifting the annual rate to 3.7%, the highest since May.
- Core inflation also picked up to 2.6%, with airfares, used cars, medical care and apparel all moving higher.
- According to the producer price report, wholesale prices jumped 1.3% in a single month, the biggest gain since early 2022, and were up 6.3% from a year ago.
- Goods prices alone rose 2.6%, the most since the series began in 2009.
- Minutes from the Fed's September meeting reveal that every official backed the rate hike and most expect another by year-end.
- The Fed's Beige Book found prices rising fast in three districts and accelerating in four.
- Markets now see another hike by December as very likely and put a 1-in-4 chance on two more.
- Retail sales data for September showed a 0.8% increase, but with prices up 0.6%, most of that gain reflects higher prices rather than more purchases.
- Weekly jobless claims, at 199,000, show the labor market is still holding up even as consumer sentiment sits at its lowest since May's record low.
- Mortgage rates have climbed to 7.5%, the highest since late 2023, according to mortgage market data, while existing home sales stayed under 4 million.
For more information on the state of the U.S. Economy, including forecasts, watch all the episodes of the Economy Express series.
