Inflation remained high in September after picking up over the summer as gains in rent and other services offset another decline in used car prices and a smaller rise in gasoline costs.
The Consumer Price Index rose 0.4% in September on a seasonally adjusted basis, after increasing 0.6% in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the index increased 3.7% before seasonal adjustment.
“Consumer prices are not fully compliant, though they have decelerated from last year. In September, inflation rose at 3.7%, the same as in the prior month, but slower than 8.2% a year ago,” commented NAR Chief Economist Lawrence Yun. “The Federal Reserve’s goal of raising the interest rates has been to bring inflation to near 2%. We are not quite there yet, partly because gasoline prices have been moving up for four straight months, now up 3% from a year ago and up 68% from pre-COVID days.
“Despite many private sector data pointing towards softer rent growth, the official government measurement is still showing a fast increase. Rents rose 7.4% from a year ago. This is the main reason why consumer prices are not fully under control and why the Fed refuses to consider cutting interest rates. It is nonetheless inevitable for rent growth to slow because of the construction of multiple new apartments. Inflation and interest rates will be lower next year.”
The index for shelter was the largest contributor to the monthly all items increase, accounting for over half of the increase. An increase in the gasoline index was also a major contributor to the all items monthly rise. While the major energy component indexes were mixed in September, the energy index rose 1.5% over the month. The food index increased 0.2% in September, as it did in the previous two months. The index for food at home increased 0.1% over the month, while the index for food away from home rose 0.4%.
The index for all items less food and energy (known as “core inflation”) rose 0.3% in September, the same increase as in August. Indexes which increased in September include rent, owners’ equivalent rent, lodging away from home, motor vehicle insurance, recreation, personal care and new vehicles. The indexes for used cars and trucks and for apparel were among those that decreased over the month.
The all items index increased 3.7% for the 12 months ending September, the same increase as the 12 months ending in August. The all items less food and energy index rose 4.1% over the last 12 months. The energy index decreased 0.5% for the 12 months ending September, and the food index increased 3.7% over the last year.