US Inflation Remains Persistently High at 8.2 Percent, Fueled by High Rent and Food Prices
US Inflation Remains Persistently High at 8.2 Percent, Fueled by High Rent and Food Prices

By Andrew Moran and Emil Akan

The U.S. annual inflation rate came in at 8.2 percent in September, down from 8.3 percent in August, according to the latest data from the Bureau of Labor Statistics. This was higher than the market expectation of 8.1 percent.

Core inflation, which strips the volatile food and energy sectors, advanced to a 6.6 percent annual rate, a new four-decade high. This was up from 6.3 percent in August and higher than the market forecast of 6.5 percent.

On a monthly basis, the consumer price index (CPI) rose 0.4 percent, while the core CPI surged 0.6 percent.

The major contributors to September inflation were increases in the shelter, food, and medical care costs.

According to BLS data, a sustained rise in food costs continues to inflate the headline figure. The food index gained 0.8 percent in September, the same as in August, and was up 11.2 percent year on year.

The shelter index, which is closely watched, went up by 0.7 percent in September, which was also the same as in August. The rent index rose 0.8 percent in September and 6.7 percent year-over-year.

And the medical care costs rose 1 percent last month, after rising 0.8 percent in August.

The latest inflation data have exacerbated real wage growth (inflation-adjusted), which has been negative for 18 months. The change in real average hourly earnings, combined with a 0.9 percent drop in the average workweek, is now negative 3.8 percent.

Investors have been keeping a close eye on inflation readings as they might offer hints on whether the U.S. central bank could pivot on monetary policy.

With inflation at these levels, some investors are concerned about the Federal Reserve’s ability to control surging prices.

Speaking at the Institute of International Finance’s annual membership meeting on Oct. 12, Larry Fink, chairman and CEO of BlackRock, warned that the central banks around the world have to use “a hammer more frequently.”

“We had in the United States in 2022 $1.1 trillion of fiscal stimulus,” he noted.

“Because of these fiscal policies, it forces the central banks to use a hammer more frequently, because it’s going to be harder to arrest that inflation.”

The latest consumer prices data come after wholesale prices were higher than what economists had anticipated.

In September, the producer price index (PPI) rose 0.4 percent month-over-month, up from the 0.2 percent drop in August and higher than the market estimate of 0.2 percent. The annual PPI also eased at a slower-than-expected pace of 8.5 percent, higher than the market consensus of 8.4 percent.

“This is Fed’s nightmare scenario: the risk that inflation stays entrenched because services inflation is far harder to bring down than energy inflation,” said Jan Szilagyi, CEO and co-founder of Toggle AI, an investment research firm, in a note. “The Fed will see this as a license to stay aggressive while the labor markets remain strong and the public tolerates rate hikes. More than that, they will maintain a hawkish message to avoid the perception that they are tip-toeing around the issue.”

Despite elevated prices, consumers are confident that inflation will come down next year. According to the latest Federal Reserve Bank of New York’s (FRBNY) Survey of Consumer Expectations, consumer inflation expectations for the year ahead declined for the third consecutive month, coming in at a more than two-year low of 5.4 percent. Three-year-ahead inflation expectations edged up slightly to 2.9 percent last month, up from 2.8 percent in August.

U.S. consumers anticipate prices to rise faster for gasoline, college education, food, and rent.

John Rekenthaler, the vice president of research at Morningstar, is confident that long-term inflation pressures will subside, alluding to the Fed Bank of Cleveland. The regional central bank forecasts the 10-year expected inflation rate will fall to 2.35 percent.

“[We] can I think be reasonably confident that long-term inflation will be milder than many investors now believe,” he wrote in a note.

Many traders have been pinning their hopes on something that Chair Jerome Powell noted at a press conference last month and what September Federal Open Market Committee (FOMC) policy meeting minutes revealed.

“Participants observed that, as the stance of monetary policy tightened further, it would become appropriate at some point to slow the pace of policy rate increases while assessing the effects of cumulative policy adjustments on economic activity and inflation,” the minutes stated.

Indeed, after the Reserve Bank of Australia (RBA) raised the benchmark policy rate by just 25 basis points, and the Bank of England (BoE) temporarily reversed course and purchased government bonds, investors are hopeful that the Fed could follow this route.

So far, there is no indication that the Fed has started reconsidering its quantitative tightening cycle.

Some economists contend that the central bank is overtightening, which could exacerbate an economic slowdown.  But Minneapolis Fed President Neel Kashkari told a town hall in Wisconsin that the bar for a pivot is “very high” due to elevated inflation.

“If the economy entered a steep downturn, we could always stop what we’re doing. We could always—if we needed to—reverse what we’re doing, if we thought that inflation was headed back down very, very quickly,” he said. “For me, the bar for such a change is very high because we have not yet seen much evidence that the underlying inflation—the services inflation, the wage inflation, the labor market—that that is yet softening.”

According to the CME FedWatch Tool, there is an 81 percent chance of a three-quarter-point rate hike at the November FOMC meeting. The odds of a 50-basis-point increase in the benchmark federal funds rate stood at 54 percent.

The financial markets tanked on the news, with the leading benchmark indexes deep in the red. The Dow Jones Industrial Average had slumped as much as 500 points, the S&P 500 fell more than 1%, and the Nasdaq Composite Index dropped about 200 points.

Affiliate News Feeds

  • Reuters
  • Washington Examiner
  • The Federalist
  • The Epoch Times
  • The Guardian
  • The Gateway Pundit
  • Judicial Watch

By Jack Phillips The head of the largest oil and natural gas trade association warned that failure to replenish the U.S. Strategic Petroleum Reserve (SPR) could trigger another oil crisis… [...]

By Jennifer Margulis and Joe Wang There is evidence that suggests that aluminum is a neurotoxin. There is evidence that shows that glyphosate is a cause of infertility. Many vegans contend that… [...]

By Naveen Athrappully NASA announced on Tuesday that it intends to cancel the development of its GeoCarb mission, which was proposed to be a low-cost satellite aimed at monitoring greenhouse gas… [...]

Union workers are lashing out at both political parties and President Joe Biden for the rail legislation signed to prevent a strike, calling the provisions a "slap in the face"… [...]

A former professor at the University of California San Diego said she gave all of her students "A" grades and no homework in a recently unearthed video. [...]

A key Senate vote over whether to provide paid sick leave for rail workers is highlighting a divide within the GOP, a party that has increasingly tried to position itself… [...]

Anyone still wearing a face mask to protect himself from Covid probably has no intention of ever shedding it now. [...]

Anyone who actually watched 'Wednesday' can see that the 'racism' accusations are ridiculous and performative. [...]

Chuck DeVore's historical fiction book 'Crisis of the House Never United: A Novel of Early America' demonstrates not only why procedure and patience matter, but also the genius of the… [...]

The head of the largest oil and natural gas trade association warned that failure to replenish the U.S. Strategic Petroleum Reserve (SPR) could trigger another oil crisis in the coming… [...]

This episode will premiere on Friday, Dec. 2 at 8 p.m. ET. In this episode of Kash’s Corner, we discuss the impending release of the Jan. 6 committee’s final report.… [...]

New York’s quest to replace the troubled Rikers Island jail complex with smaller facilities across the five boroughs could lead to either hazardous overcrowding or the release of dangerous detainees,… [...]

Health Security Agency issues rare alert over rise in cases, urging people to seek immediate medical help if they see symptomsQ&A: what are the symptoms and how can strep A… [...]

Exclusive: Labour says ministers have been told repeatedly that people with prepayment meters are not getting enough supportCase studies: ‘I can’t afford to heat my son’s room’Up to half a… [...]

Group G match at Stadium 974 kicks off at 7pm GMTCameroon v Brazil – follow live with Scott MurrayShare your thoughts with Will via email or on TwitterThe national anthems… [...]

An estimated 50,000 Canadian truckers traveled across Canada in a massive caravan protesting the COVID mandates. Canadian media tried to paint the protests as Russian propaganda. Canadian Prime Minister Justin… [...]

“No one should be forced to get a vaccine against their will, but until the laws change our medical professionals stand ready to work with you or a loved one… [...]

Ryan Samsel was arrested in January 2021.  He was blinded by DC prison guards in one of his many beatings since his arrest. Ryan Samsel attended the January 6, 2021,… [...]

From Fox News: The Secret Service will not say why they changed their position regarding a government watchdog’s records request into Hunter Biden’s gun investigation records. Government watchdog Judicial Watch… [...]

(Washington, DC) – Judicial Watch announced today that the United States Secret Service has repeatedly changed its position about whether it is in possession of records related to the investigation… [...]

The Biden administration is giving a nonprofit partially funded by leftwing billionaire George Soros’s Open Society Foundations (OSF) $12 million to strengthen labor rights and empower workers in three Latin… [...]


USNN World News (USNN) USNN World News Corporation is a media company consisting of a series of sites specializing in the collection, publication and distribution of public opinion information, local,...