Inflation holds steady as Fed mulls more rate hikes

by Sylvan Lane - 10/12/23 8:59 AM ET

FILE - A woman shops at a supermarket in Warsaw, Poland, on Dec. 9, 2022. Poland's central bank lowered its interest rates by 75 basis points on Wednesday Sept. 6, 2023 despite the country's double-digit inflation rate. The move prompted concerns that the central bank was wading into politics with a premature rate cut to help the populist governing party ahead of parliamentary elections next month.(AP Photo/Michal Dyjuk, File) — FILE – A woman shops at a supermarket in Warsaw, Poland, on Dec. 9, 2022. Poland’s central bank lowered its interest rates by 75 basis points on Wednesday Sept. 6, 2023 despite the country’s double-digit inflation rate. The move prompted concerns that the central bank was wading into politics with a premature rate cut to help the populist governing party ahead of parliamentary elections next month.(AP Photo/Michal Dyjuk, File)

Consumer prices rose 0.4 percent in September and 3.7 percent annually, according to data released Thursday by the Labor Department.

The consumer price index (CPI) — a closely watched gauge of inflation — rose roughly in line with economists’ expectations. The annual inflation rate stayed flat, and monthly price growth fell from a 0.6-percent increase in August.

Rising housing costs were the biggest contributor to inflation in September, marking the second straight month of price growth driven primarily by rents and the impact of high home prices.

Shelter costs rose 0.6 percent in September and are up 7.2 percent on the year. A 10.6-percent spike in gasoline costs last month also drove overall inflation higher.

The October inflation report is likely to comfort Federal Reserve officials as they mull whether to hike interest rates again before the end of the year.

Annual inflation still remains well above the Fed’s target of 2 percent, and the September jobs report showed a labor market far stronger than most economists expected.

Even so, inflation for many goods and services has fallen toward pre-pandemic levels. Fed rate hikes would also do little to curb inflation in housing and gasoline but could still bring the U.S. economy closer to recession.

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