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Consumer price indexes

Inflation Heats Up to 3% Pace in September, Amid Government Shutdown

Strategic Insights

— 2 min read

The government shutdown provided a momentary reprieve in releasing official economic data, but September's consumer price index report indicated that inflation is indeed rising, albeit at a slightly slower pace than expected. The report stated that prices rose at a 3 percent annual rate, a small increase from August's 2.9 percent rate and above April's post-pandemic low of 2.3 percent, according to the Bureau of Labor Statistics. Gasoline prices, however, jumped 4.1 percent in September, contributing to a 0.3 percent monthly increase. Core inflation, which excludes food and energy, eased slightly to a 3 percent annual rate.

Key Takeaways:

  • The September consumer price index showed prices rising at a 3 percent annual rate, slightly above economists' expectations and above April's post-pandemic low of 2.3 percent.
  • Gasoline prices jumped 4.1 percent in September, contributing to a 0.3 percent monthly increase and accounting for a large portion of the overall price increase.
  • Core inflation, which excludes food and energy, eased slightly to a 3 percent annual rate, indicating that underlying pressures may be stabilizing somewhat.
  • Some categories, such as apparel and furniture, showed significant gains, while others, including housing, fuel, and utilities, continued to experience price increases, particularly for shelter, which rose 3.6 percent for the year.
  • The ongoing impact of President Donald Trump's tariffs on consumers was evident, particularly in categories with direct exposure to trade levies, such as apparel and furniture.
  • Despite the increase, inflation remains stubbornly above pre-pandemic norms, leaving the cost of everyday goods and services about 25 percent higher than before the pandemic.
  • Some experts, including Chief Economist at RSM, Joe Brusuelas, argue that tariffs don't fully explain the rise in inflation, which is still driven largely by a 3.6 percent annual rise in the prices of services such as housing, fuel, and utilities.
  • The White House claims that inflation is actually running at a 2.5 percent pace, using an unusual method called "annualization" that projects a full year's change from a shorter period.

Statistics:

  • September consumer price index rose at a 3 percent annual rate.
  • Gasoline prices jumped 4.1 percent in September.
  • Core inflation eased slightly to a 3 percent annual rate.
  • The cost of everyday goods and services is about 25 percent higher than before the pandemic.
  • Shelter price inflation slowed in September, but was up 3.6 percent for the year.
  • Inflation remains above pre-pandemic norms, with prices increasing at a 3.6 percent annual rate for services such as housing, fuel, and utilities.

Sources:

  • Bureau of Labor Statistics
  • New York Times
  • White House press secretary Karoline Leavitt
  • RSM Chief Economist Joe Brusuelas
  • Oxford Economics Deputy Chief U.S. Economist Michael Pearce
  • Philadelphia Fed President Anna Paulson
  • Citigroup Chief Economist Nathan Sheets

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