Quick Inflation Update (Patreon)

Although inflation is showing signs of decreasing, the robust labor market suggests that there's still a potential for inflation to rebound. The labor market statistics can be misleading, but then again, that's typical of governmental reporting. Here are the key points on inflation: Always keep in mind that OIL is the unpredictable factor, especially with the current instability in the Middle East.

1. Consumer Prices: Climbed at a 3.7% annual pace in September, matching the rate set in August. Core prices decelerated to a 4.1% annual pace in September from 4.3% in August.
2. Monthly Change: The headline consumer-price index increased 0.4% in September from the month earlier, compared to a 0.6% climb in August.
3. Economists' Expectations: Expected a 0.3% price rise in September and an annual pace slowing to 3.6% from 3.7%.
4. Shelter Costs: The largest contributor to the overall monthly increase. Rent costs increased by 0.5%, and an equivalent measure for homeowners rose 0.6%.
5. Food Prices: Climbed 0.2% over the month. Growth in grocery prices was 0.1%, while the cost of food at restaurants rose to 0.4%.
6. Energy Prices: Utility gas services fell by 1.9% over the month. Gasoline prices decelerated but still saw a 2.1% increase in September after a 10.6% gain in August.
7. Economists' Consensus vs. Actual: Strength in food and gasoline costs led to a 0.1 percentage point higher headline price gain than expected. Core prices matched expectations on a monthly and annual basis, indicating a mild year-over-year slowing.
8. Federal Reserve's Stance: The Federal Reserve's efforts to slow the economy by tightening monetary policy are highlighted, given the strong price growth.
9. Historical Context: Inflation has decreased significantly from its peak of roughly 9% in June 2022.
10. Central Bank's View: The slowing of growth in core prices is seen as welcome news, likely leading to steady interest rates in the upcoming Oct. 31-Nov. 1 meeting.
11. Potential Rate Hike: The report suggests the possibility of another interest-rate hike in December. This follows September's strong jobs report, indicating the economy might handle further tightening.