Inflation in the U.S. slowed in September, but at a monthly rate that still exceeded economists’ forecasts. The pressure came mainly from increases in rent and gasoline.
The consumer price index rose 0.4% from 0.6% in August, the Bureau of Labor Statistics said in a statement Thursday. The gain from a year earlier was 3.7% the same rate of August. Economists surveyed by Reuters expected a monthly inflation of 0.3% and an annual rate of 3.6%.
The core CPI, which excludes the costs of food and energy, rose 0.3% from August and 4.1% in 12 months, matching economists’ estimates. Annual inflation slowed from 4.3% in September.
The shelter index gained 0.6% in September, double the rate of August. The index includes costs of rents and hotels. Gasoline prices rose 2.1% last month, a slowdown from 10.6% in August, but still one of the main pressures of the month.
Fed decision
The cooldown in inflation may give the Fed more arguments to end its tightening cycle. The U.S. central bank maintained its benchmark rate in the range of 5.25% to 5.5% on Sept. 20, signaling that another hike could be necessary this year.
Earlier this week, Fed Dallas President Lorie Logan said that the recent rise of Treasury yields can reduce the need to increase interest rates.
“Higher term premiums result in higher term interest rates for the same setting of the Fed funds rate, all else equal,” Logan said in prepared remarks for the annual meeting of the National Association of Business Economics Monday.
“Thus, if term premiums rise, they could do some of the work of cooling the economy for us, leaving less need for additional monetary policy tightening to achieve the FOMC’s objectives.”
Yields on the 10-year U.S. Treasury rose to 4.8% on Oct. 6, their highest level since 2007. Logan, who is a voting member of the FOMC, said that inflation data have been “somewhat uneven,” despite the progress seen during the summer.
The next interest rate decision by the Fed is on Nov. 1, followed by another one on Dec. 13.
Oil prices continue to be a threat to global inflation, especially following the crisis between Israel and Hamas. Oil rose as much as 4% on Monday after the terrorist attacks and the retaliation against Gaza. Since then, prices have returned to levels of last week.
