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Inflation Jumps to 3.7% 10/14 08:01
U.S. inflation accelerated last month as gas, clothes, and air fares got
more expensive, evidence that rising prices remain an economic challenge just a
few weeks before the midterm elections.
WASHINGTON (AP) -- U.S. inflation accelerated last month as gas, clothes,
and air fares got more expensive, evidence that rising prices remain an
economic challenge just a few weeks before the midterm elections.
The consumer price index rose 3.7% in September compared with a year ago,
the Labor Department said Wednesday, up from 3.4% in August. On a monthly
basis, costs jumped 0.6% from August to September, up from 0.4% the previous
month.
The figures underscore the lingering impact of the Iran war on gas prices
and the stubborn persistence of inflation, which fell sharply from a 9.1% peak
in 2022 but this year has ticked higher since the war began in late February.
Elevated inflation has posed political problems for Republicans in Congress and
is a challenge for the Federal Reserve, which is required by Congress to seek
stable prices.
Excluding the volatile food and energy categories, core prices rose 2.6% in
September from a year ago, up from 2.4% the previous month. And they climbed
0.3% from August to September, the same as the previous month.
THIS IS A BREAKING NEWS UPDATE. Check back for updates. AP's earlier story
follows below.
WASHINGTON (AP) -- Inflation likely worsened in September in one of the last
price reports the government will issue before the midterm elections that have
been heavily defined by concerns over affordability.
Consumer prices are forecast to have risen 3.6% in September compared with a
year earlier, up from 3.4% in August, according to a survey of economists by
data provider FactSet. The Labor Department will issue the report Wednesday
morning.
On a monthly basis, prices are expected to have risen 0.6% from August to
September, FactSet said, up from 0.4% the previous month and the biggest jump
since April.
The figures will likely underscore the lingering impact of the Iran war on
gas prices and the stubborn persistence of inflation, which has fallen sharply
from a 9.1% peak in 2022 but has ticked higher since the war began in late
February. Elevated inflation has posed political problems for Republicans in
Congress and is a challenge for the Federal Reserve, which is required by
Congress to seek stable prices.
Ongoing inflation has taken a toll on Trump's standing with U.S. voters. A
poll by The Associated Press-NORC Center for Public Affairs Research found that
just 17% of U.S. adults approve of his handling of the cost of living issue.
And only 26% approve of his handling of the economy overall, a new low.
Excluding the volatile food and energy categories, core prices likely rose
2.5% in September from a year ago, up slightly from 2.4% in August. That is
closer to the Fed's 2% inflation target, but it has been stuck at mostly that
level since January of this year -- just before the Iran war. Core prices are
forecast to have risen just 0.2% from August to September.
Federal Reserve officials are watching inflation data closely to determine
whether they need to raise their short-term interest rate further, and by how
much.
Fed Chairman Kevin Warsh said last month that inflation isn't moving quickly
enough back to the central bank's target, causing the Fed to hike rates for the
first time in three years, to about 3.9%.
"The plain fact is that inflation is too high and has been for too long,"
Warsh said at a news conference last month. Inflation reports over the summer
"do not tell me that underlying trends have meaningfully improved," he added.
Yet some key Fed officials have suggested the central bank can wait before
increasing rates again. The Fed has a policy meeting Oct. 27-28, but most Wall
Street investors expect it to hold rates then, and potentially implement
another hike in December. Fed officials have penciled in just one more rate
hike this year.
By raising borrowing costs, the Fed hopes to slow spending and growth and
cool price increases. Yet much of the current inflation comes from supply
shocks, such as the Iran war's disruption to oil and gas supplies, and higher
interest rates can't address those bottlenecks.
Warsh has said his goal is to keep the gas price spike from seeping into
more areas of the economy. It's already pushed up the price of air fares about
23% from a year ago. Gas prices jumped about 9% from August to September, a big
increase that will drive much of the overall jump in inflation. Rising gas
costs are a highly visible sign of inflation and often drive down measures of
consumer sentiment about the economy.
Prices at the pump have ticked lower in recent weeks, though they remain
higher than a month ago. Gas prices averaged $4.34 a gallon nationwide Tuesday,
up a few cents from a month earlier.
Those costs raise shipping and other expenses for many large and small
businesses, some of which are forced to pass the cost to consumers. Last week,
PepsiCo said that it will raise prices for its snack foods, including Doritos,
Ruffles, Sun Chips, and some sodas to offset higher costs for fuel, aluminum,
and food ingredients.
The artificial intelligence buildout has also sharply elevated the cost of
semiconductors, computer equipment, and electrical components, which have been
passed into costs for consumer electronics such as gaming devices, laptops, and
smartphones.
On September 1, Nintendo increased the price for its Switch 2 gaming system
by 11% to $499.99. And Apple's newest iPhone, the iPhone 17, cost about 10%
more than its previous upgrade, though some of that likely reflects greater
capabilities.
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