WASHINGTON – US consumer prices rose slightly more than expected in September, though the annual increase in inflation was the smallest in more than 3½ years.
It will potentially keep the Federal Reserve on track to cut interest rates again next month.
The consumer price index (CPI) increased 0.2 per cent in September after gaining 0.2 per cent in August, the Labour Department’s Bureau of Labour Statistics said on Oct 10.
In the 12 months through September, the CPI climbed 2.4 per cent. That was the smallest year-on-year rise since February 2021 and followed a 2.5 per cent advance in August.
Economists polled by Reuters had forecast the CPI edging up 0.1 per cent and rising 2.3 per cent year on year. The annual increase in inflation has slowed from a peak of 9.1 per cent in June 2022.
Together with a significant moderation in the inflation measures tracked by the US central bank for its 2 per cent target, that allowed the Fed to shift focus to the labour market and deliver an unusually large 50 basis points rate cut in September.
Minutes of that meeting published on Oct 9 showed a “substantial majority” of policymakers supported beginning an era of easier monetary policy, but there appeared even broader agreement that the initial move would not commit the Fed to any particular pace of rate reductions in the future.
The first rate reduction since 2020 lowered the central bank’s policy rate to the 4.75 per cent to 5 per cent range. The Fed hiked rates by 525 basis points in 2022 and 2023.
Labour market resilience and solid consumer spending have, however, forced investors to abandon hopes for another half-percentage point rate reduction next month.
The economy added the most jobs in six months in September and the
