Consumer prices rose by 5.4 percent in September compared with a year ago and 0.4 percent from the month before, according to data released Wednesday by the Labor Department.
The rise was a little higher than experts expected as economists surveyed by Dow Jones predicted a 5.3 percent year-over-year increase in September and a monthly increase of 0.3 percent in the Consumer Price Index, which tracks inflation. While the monthly increase was below the 0.9 percent spike seen in June, it still suggests inflation has yet to slow down.
“Wednesday’s still elevated Consumer Price Index marks about 6-months’ worth of hot inflation data, suggesting that inflation is not as transitory as many investors previously expected,” said Nancy Davis, founder of Quadratic Capital Management.
Wednesday’s inflation report comes just as third-quarter earnings season begins, she noted, adding that “investors will be looking to see if inflation is starting to negatively affect corporate profits in a significant way.”
The core consumer price index, which excludes volatile food and energy costs, rose 4 percent from a year ago, matching the 4 percent year-over-year jump that the index saw in August. That measure of inflation has eased since it spiked 4.5 percent in June, marking the fastest acceleration of prices it tracks since 1991.
Much of the price increases are due to “continued supply disruptions and labor shortages,” Credit Union National Association senior economist Dawit Kebede said. “The imbalances between demand and supply that have been driving price increases hasn’t changed after a slight indication of slowing down in August.”
“The indexes for airline fares, apparel, and used cars and trucks all declined over the month,” the feds said Wednesday in a press release, adding though that the prices for new vehicles, household furnishings and other goods rose for the month.
Last month, the White House accused the country’s biggest meat processors of profiteering by charging higher prices during the pandemic. But the industry hit back by saying those costs are rising throughout the industry and they need to hike prices to keep a profit.
Anu Gaggar, global investment strategist for Commonwealth Financial Network, noted that “the rate of price increases has slowed down from the torrid pace of spring and summer.” She added, “Some of the transitory components are already moderating, such as airlines, apparels, and used autos.”
Volatility in prices of those goods has been central to the Federal Reserve’s argument that the recent flare-up in inflation is temporary and not a reason to taper the government’s bond-buying program that’s been a boon to the stock market.