US inflation above expectations
US consumer prices rose by 0.2% in September from August, excluding energy and food by 0.3%.
Commerzbank Economic Research
10/10/2024
The data
US consumer prices rose by 0.2% in September compared to the previous month. The year-on-year rate fell from 2.5% to 2.4%. The more important core rate, which excludes the volatile prices of energy and food, was 0.3% compared to the previous month. The year-on-year rate here rose from 3.2% to 3.3%. The data were slightly higher than expected in each case.
The details
US consumer prices rose more sharply than expected in September compared to the previous month. This was partly due to a surprisingly high 0.4% increase in food prices, which offset part of the decline in gasoline prices. However, the rather strong increase in prices excluding energy and food (core rate), which tends to provide more information about the trend, was more important.
The core rate was 0.3%, the same as in August, while only 0.2% is compatible with the Fed's inflation target (2% for the deflator of personal consumption expenditures (PCE), which on average is lower than consumer price inflation) (Chart 1).
This time, the inflation drivers were goods prices, which rose slightly by 0.2% instead of the usual decline. As in August, core services rose by 0.4% compared to the previous month.
However, prices that fluctuate strongly from month to month, such as those for airline tickets (+3.2%), have risen in particular. This puts the increase of serivces prices into perspective. By contrast, rents and imputed rents for owner-occupied homes, the most important expenditure item, have noticeably slowed. If this is confirmed in the coming months, the core rate should be somewhat lower again. In principle, however, the figures confirm our assessment that inflation is likely to settle at an excessively high level in the longer term.
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