Shelter Costs Keep Overall Inflation High
Inflation held steady for a second month, remaining well above the Fed’s target rate. The price of goods and services paid by U.S. consumers rose 3.7% in the year-ending September, according to the Consumer Price Index (CPI) for All Urban Consumers measured by the Bureau of Labor Statistics. This increase matched the growth seen in August and was quite a bit ahead of the recent low of 3% from June. Annual inflation as of September was a touch above economists’ expectations of 3.6% and still notably beyond the Federal Reserve’s target of 2%. However, inflation has cooled considerably since reaching a 40-year high of 9.1% in June 2022. Core inflation, which strips out volatile food and energy categories, has displayed a downward trajectory in prices. That index edged down on a year-over-year basis from 4.3% in August to 4.1% in September, the smallest increase since September 2021. The cost of shelter, which is keeping the overall inflation rate high, rose 7.2% from a year ago. However, the shelter index has a well-documented lag effect. Excluding the cost of shelter, consumer prices were up just 2% year-over-year in September.