Prices rose 8.2% from a year ago, according to the latest Consumer Price Index, demonstrating that the Federal Reserve's goal of price stability remains elusive.
BLS: Prices climbed 0.4% from August.
Core CPI, excluding food and energy, rose 6.6% from a year ago. This is the highest core inflation rate since 1981, topping February and March's 6.4 percent. Monthly core costs rose 0.6%.
The index is expected to gain 0.2% monthly and 8.1% yearly. Core CPI is predicted to climb 0.4% month-to-month and 6.5% yearly.
Monthly inflation rises. After zero in July, the CPI has risen for two months. In August it rose 0.12%. Prices jumped 0.31 percent in July and 0.56 percent in August.
The headline result was below September's 8.3 percent, while the core figure was above August's 6.5 percent.
With higher energy prices, inflation would rise. In March, energy commodities fell 4.7% but are up 19.7% from a year earlier. Prices fell 4.9% in March but are up 18.2% from a year ago. This momentarily relieved price pressures, but gas prices are now rising. Electricity prices rose 0.4% and 15.5% in a year. Gas prices jumped 2.9% and 33.1% last year.
September food prices rose 0.8%, like August. 11.2% price growth in a year. Grocery prices rose 0.7% for a second month. 13% more than a year ago.
Core goods inflation dropped, minus energy and food. Monthly figure flat, down from 0.5%. 12-month core goods prices rose 6.6%. September clothing prices fell 0.3% and are up 5.5% from last year. New car expenses are up 0.7% from a year ago, 9.4%. Prices for secondhand cars and trucks fell 1.1% but are up 7.2% from last year.
Core services rose 0.8% in March and 6.7% from a year ago. Medical index up 0.8% in September. The shelter index rose 0.7% for a second month and 6.6% from a year ago.
Stock futures fell as investors adjusted their Fed rate predictions to reflect growing inflation and rates. The market indicated probability of a 75 basis point hike at the Fed's next meeting rose from 84% to 99%. A 75-point hike in December is 62% likely.
Before the CPI, futures predicted shares would rise at market open. That means investors expected inflation to rise. The BBD last night discussed why analysts and investors continue to underestimate U.S. inflation.
Inflation is high. The September figure is the highest since 1981. After stating inflation was temporary last year, the Fed is now pushing for price stability, which Jerome Powell believes will cost businesses and consumers.
Rates have been lifted three times by 75 basis points since March. It's put the Fed's benchmark rate above 3%. According to market indicators, investors expect the Fed to boost its target rate by 4.5 percentage points this year.
Fed targets overnight rate banks pay to borrow reserves and pays interest on reserves retained. Long-term yields track short-term rates, thus the Fed's tightening has drove them up, raising borrowing costs for the government, homebuyers, consumers, and companies. The 10-year Treasury yield is now 4%, up from 1.5%. The average 30-year fixed mortgage rate is 6.7%, up from 3.2%. The yield on "junk" corporate bonds jumped from 4.35 to 9.42 percent last year.
Since bond yields fluctuate opposite of bond prices, bondholders have lost money. Investors discount future cash flows more when rates are high. Investors believe the Fed's tightening could cause a recession and hurt business profits. Due to falling bond and stock prices, diversified investor portfolios have lost a lot.
Wages are poor. Profits decreased as a result. In September, real wages fell 0.1% due to a 0.3% pay raise and 0.4% price hike. Real hourly wages fell 3.0% a year. The decline in real hourly wages and a 0.9% drop in the average workweek resulted to a 3.8% drop in real average weekly earnings.
The Fed anticipates a skewed labor market with demand for employees exceeding supply, causing inflationary pressures. In September, unemployment reached a record low 3.5%. August had 1.1 million more job postings than September. The job-to-unemployed ratio is 1.7, a post-pandemic high. Summer was 2-1. About 1:1.
What caused inflation to increase is a matter of debate. Corporate greed, pandemic and reopening supply shocks, and Russia's attack on Ukraine were blamed. Most economists believe inflation is caused by supply constraints and easy monetary policy and stimulus spending. Last year, President Biden pushed for a $1.9 trillion stimulus measure despite analysts' warnings it might overheat the economy. The current inflation is called "Bidenflation."
The Biden White House campaigned for the Inflation Reduction Act, which economists argue won't decrease inflation. A climate change and health care spending plan is expected to increase inflation in the next few years since it increases the budget deficit before revenue-raising initiatives kick in years from now.
The preceding is a summary of an article that originally appeared on BREITBART.
