September prices rose at a pace of 8.2 percent compared to a year ago, according to data released Thursday by the Bureau of Labor Statistics, a slight slowdown from the summer peak but still at highs not seen in four decades.
“Core inflation,” a closely-watched measure that strips out more volatile categories like food and energy, also came in hot, climbing 0.6 percent over the month, matching a similar pace in August. That’s a particularly worrying sign that inflation is becoming even more entrenched in the economy — and will be that much harder to root out.
The latest inflation report was driven by increased costs for shelter, medical care, health insurance, new vehicles, home furnishings and education. Higher prices in those categories have all persisted for months, and were only partly offset by a 4.9 percent drop in the gasoline index, as prices continue to tick down from their summer peaks.
Rent remains one of the most significant slices of the inflation report, known as the consumer price index. Rent costs rose 0.8 percent in September, up slightly from the previous two months. It is also up 7.2 percent in the past year, marking the largest increase since 1982.
The Fed’s rate hikes immediately hit other parts of the housing market by driving up costs for mortgages and helping home prices cool. But economists expect it will take months for rent costs to reverse course, leaving many Americans to stretch their budgets just to stay in their homes, or move somewhere else more affordable.
The food index rose 0.8 percent in September, as it did in August. Fruits and vegetables were up 1.6 percent, and cereals and bakery goods were up 0.9 percent. Flour, turkey and butter hit new highs. All told, food costs are up 11.2 percent over the past year.
A handful of indexes dropped in September. Used cars and trucks fell 1.1 percent, not as much as analysts were expected. Apparel dipped 0.3 percent.
Inflation remains the economy’s biggest problem, posing a challenge to Democrats in the White House and Congress going into the midterm elections next month. For more than a year, families have swallowed rising costs for groceries, gas, rent and nearly everything in between. Businesses are struggling to offset higher costs for transportation, find enough workers or get around persistent supply chain issues. Also on Thursday, the Social Security Administration announced an 8.7 percent increase in benefit checks for seniors starting next year, a response to the fastest inflation America has seen in four decades.
Looming over today’s bleak reality is an even more uncertain future, since no one knows whether the Federal Reserve’s efforts to cool down prices, and the broader economy through higher interest rates, will spur a recession. Even President Biden took an unusual step this week in acknowledging the possibility of a recession. “I don’t think there will be a recession. If it is, it’ll be a very slight recession,” Biden said in a CNN interview that aired Tuesday.
Officials at the Federal Reserve have made clear that prices are so high that the Fed is far from scaling back their aggressive rate hike campaign, even as experts increasingly warn that the Fed risks overcorrecting the economy.
“From the point of view of the Fed, you want to see a trend. One number is not going to give you a trend,” said Roberto Perli, head of global policy research at Piper Sandler and a former Fed economist. “The…
Read More: September CPI rises 0.4 percent despite Fed rate hikes
