U.S. inflation stays high but prices rose less than economists forecast
U.S. inflation remained elevated last month as gas prices jumped while the cost of rents and some services cooled, painting a mixed picture of the expenses consumers are facing in a murky economy where growth appears steady but hiring slow.
Consumer prices increased three per cent in September from a year earlier, the Labour Department said Friday, up from 2.9 per cent in August. Excluding the volatile food and energy categories, core prices also rose three per cent, a decline from 3.1 per cent in the previous month.
On a monthly basis, prices rose 0.3 per cent in September, down from 0.4 per cent the previous month. Core inflation also cooled to 0.2 per cent, from 0.3 per cent in August.
The report on the consumer price index is being issued more than a week late because of the government shutdown, now in its fourth week. The Trump administration recalled some Labour Department employees to produce the figures because they are used to set the annual cost-of-living adjustment for roughly 70 million Social Security recipients.
The figures reflect a smaller increase than many economists forecast and will come as a bit of relief to Federal Reserve officials, who have signalled they will cut their key interest rate at their meeting next week and may do so again in December. Still, inflation remains above the Fed’s two per cent target, underscoring the high stakes of the Fed’s moves.
Gas prices jumped 4.1 per cent just in September from the previous month, a major driver of inflation last month. Grocery prices rose 0.3 per cent, less than in August, and are 2.7 per cent higher than a year ago.
Affordability a political issue
The issues of affordability and the cost of necessities are gaining in political importance. Concerns over the costs of rent and groceries have played a key role in the mayoral race in New York City.
And U.S. President Donald Trump, who has acknowledged that the spike in grocery prices under former president Joe Biden helped him win the 2024 election, has been considering importing Argentine beef to reduce record-high U.S. beef prices, angering U.S. cattle ranchers.
The cost of ground beef has jumped to $6.32 US a pound, a record, in part because of tariffs on imports from countries such as Brazil, which faces a 50 per cent duty. Years of drought that have reduced cattle herds have also raised prices.
Even as inflation has fallen sharply from its peak of 9.1 per cent more than three years ago, it remains a major concern for consumers. About half of all Americans say the cost of groceries is a “major” source of stress, according to an August poll by The Associated Press-NORC Center for Public Affairs Research.
And the Conference Board, a business research group, finds that consumers are still referencing prices and inflation in responses to its monthly survey on consumer confidence.
U.S. President Donald Trump…
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