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Prices paid by US consumers rose more than expected in September, resuming a faster pace of growth and emphasizing continued inflationary pressures in the economy.
According to data released by the Ministry of Labor on October 13, the consumer price index has risen 0.4% since August. Compared to a year ago, the CPI is up 5.4%, comparable to the largest annual increase since 2008. What is called core inflation rose 0.2% from the previous month.
The median estimate from the Bloomberg survey by economists required an overall measurement increase of 0.3% per month and a core rate increase of 0.2%.
The combination of unprecedented transportation challenges, material shortages, high commodity prices and rising wages has significantly boosted producer costs. Many have passed some of these costs on to consumers, leading to more sustained inflation than many economists initially expected, including Federal Reserve economists.
The rise in prices seen last month reflects rising food and shelter costs. Meanwhile, measures for used cars, trucks, apparel, and airfares have cooled.
After the report, US equity futures fluctuated and Treasury yields remained almost unchanged.
CPI data reflects the cross-current of the economy. Hotel fares have fallen, reflecting the impact of Delta Variant on travel, but inflation has expanded beyond the categories associated with resumption.
Now, rising house prices are starting to filter the data. Primary home rents rose 0.5%, the highest since 2001, but homeowner equivalent rent measurements recorded the largest increase in five years. Considered as a more structural component of the consumer price index, the cost of shelters, which account for about one-third of the overall index, could prove a more durable tailwind for inflation.
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The report shows few signs of diminishing supply chain challenges, especially those that plague companies, which could increase the Fed’s tendency to begin tapering asset purchases sooner. The minutes of last month’s Federal Open Market Committee meeting (October 13) provide further insight into policymakers’ views on employment development and the tapering inflation target.
Inflation expectations of US consumers continued to rise in September, accelerating to record highs for the first and third years, according to a survey by the New York Federated Bank on October 12.
According to the report, US consumers have also seen prices for new cars, household equipment and fixtures rise 1.3%, a record high. And looking to the future, rising energy prices are set to take a bite further from workers’ salaries.
Wages have risen in recent months, but rising consumer prices have reduced the purchasing power of Americans. Inflation-adjusted average hourly wages increased 0.2% from the previous month in September, but fell 0.8% from a year ago, another data showed October 13.
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Consumer prices as an inflationary dog economy are higher than expected
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