Economic Indicators

U.S. inflation faster than forecast in September — Headline U.S. consumer prices grew at a faster-than-anticipated rate in September, potentially complicating the Federal Reserve’s upcoming policy decisions aimed at corraling elevated inflation.

The consumer price index (CPI) registered 3.7% on an annual basis, the same pace as in August, and rose by a larger-than-forecast 0.4% month-on-month, data from the Bureau of Labor Statistics showed. Economists had expected readings of 3.6% and 0.3%.

Meanwhile, the monthly underlying rate, which strips out volatile items like food and energy, came in at 0.3% compared to August and cooled to 4.1% year-on-year — in line with estimates.

The data comes as Fed officials, who have made defeating rapid price gains a key objective of an aggressive campaign of borrowing cost hikes, have been on the lookout for signs that this more restrictive policy has weighed on inflationary pressures.

Wednesday’s minutes from the central bank’s September meeting showed that members agreed that they should “proceed carefully” on upcoming rate decisions. In particular, officials flagged that they are wrangling with two major risks: not tightening policy enough to curb heightened inflation and lifting rates to such a height that it impacts broader domestic economic activity.

However, crucially, the minutes reflected the viewpoints of many Fed policymakers prior to a recent spike in U.S. Treasury yields.

Some officials have suggested that this jump may now need to be considered ahead of any future rate choices. At an event on Wednesday, Fed Governor Christopher Waller posited that the run-up in yields may have in effect done “some of the work” of tightening financial conditions for policymakers — a sentiment echoed by several other Fed members this week.


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