US Inflation Rate Remains Below Market Forecasts, Sees Slowing Core Inflation and Rising Energy Prices

Strategic Insights -

The US annual inflation rate slowed to 3% in September, coming in below market forecasts, while month-over-month inflation accelerated to 0.3%. Food prices rose by 3.1% over the year, while energy prices surged 2.8%. Energy services prices, in particular, drove the overall inflation up in September, rising 6.4% year-on-year, with utility (piped) gas and electricity services increasing by 11.7% and 5.1% respectively. Core inflation, which excludes food and energy price increases, slowed to 3% in September.

Key Takeaways:

  • The US annual inflation rate was at 3% in September, down from 2.9% in August, according to the Bureau of Labor Statistics.
  • Food prices rose by 3.1% over the year, while energy prices surged 2.8% in September.
  • Energy services prices drove the overall inflation up in September, rising 6.4% year-on-year, with utility (piped) gas and electricity services increasing by 11.7% and 5.1% respectively.
  • Shelter prices rose 0.2% over the month, while food prices increased 0.2%, and energy prices rose 1.5% in September, largely due to a 4.1% increase in gasoline prices.
  • The core inflation, which excludes food and energy price increases, was at 3% in September, down from 3.1% in August.
  • The upcoming Fed meeting is crucial, as the central bank will announce its interest rate decision next Wednesday, with expectations of a rate cut due to the lower-than-expected inflation data and the slowing job market.
  • Despite the government shutdown, which caused a blackout for government data releases, the inflation data was released this month, indicating that the freeze had a limited impact on data collection.

Statistics:

  • US annual inflation rate: 3% in September (Bureau of Labor Statistics)
  • Month-over-month inflation: 0.3% (Bureau of Labor Statistics)
  • Year-over-year food price increase: 3.1% (Bureau of Labor Statistics)
  • Year-over-year energy price increase: 2.8% (Bureau of Labor Statistics)
  • Core inflation: 3% in September, down from 3.1% in August (Bureau of Labor Statistics)
  • Energy services price increase: 6.4% year-on-year (Bureau of Labor Statistics)
  • Utility (piped) gas price increase: 11.7% year-on-year (Bureau of Labor Statistics)
  • Electricity services price increase: 5.1% year-on-year (Bureau of Labor Statistics)

Sources:

  • Bureau of Labor Statistics
  • The Federal Reserve
  • The US government data releases