The latest inflation data from the United States shows a continued cooling trend for September, marking the third straight month of declines and placing the annual rate at 8.2 percent. This figure is one-tenth lower than August, according to the Bureau of Labor Statistics, which released the update on Thursday.
Month-over-month consumer prices rose by up to four tenths, a smaller increase after a slight uptick in August as well.
On an annual basis, core inflation, which excludes food and energy, climbed to 6.6 percent, up three-tenths from August and seven-tenths from July. The energy index lingered near the higher end of recent readings, standing at 19.8 percent for the year ending in September compared with 23.8 percent in August; the food index ended the year with an 11.2 percent gain.
In the month-to-month view, the September increase was driven by higher prices for shelter, food, and medical care, though gasoline showed a significant offset with a nearly five percent drop. The food index rose by 0.8 percent, while energy prices overall declined by 2.1 percent from August, helped by lower gasoline costs, though natural gas and electricity rose by 2.9 percent and 0.4 percent respectively.
The core monthly inflation rate rose 0.6 percent in September, mirroring the August reading, signaling persistent pressure in underlying prices. In the housing and health services sectors, prices also rose relative to August, with increases seen in insurance costs, new vehicles, and training services.
Conversely, prices for September fell in used cars and several consumer categories including communication and apparel, contributing to a mixed inflation picture across sectors.
Even with the Federal Reserve’s ongoing rate hikes, inflation remains elevated. The central bank raised its target range by 0.75 percentage points at its last policy meeting, the fifth such move since March, reinforcing a stance aimed at easing price growth.
Inflation peaked in June at about 9.1 percent, then eased to roughly 8.5 percent in July. Minutes from the Fed’s most recent policy gathering, released recently, indicate that unemployment is expected to rise if inflation is to continue retreating further. That meeting, held on September 20–21, included a consensus that delaying action to restrain inflation could be more costly than moving too aggressively.
Looking ahead, the Fed signaled that inflationary pressures may persist in the near term due to labor market tightness, ongoing supply chain challenges, and rising service prices. The central bank outlined a gradual path for inflation to ease in the coming years while maintaining a restrictive policy stance that supports further rate increases if necessary.
In its updated projections, the Fed still anticipated higher interest rates at year end and a modest easing through 2023 and into 2025, with policy expectations reflecting a cautious approach to balancing growth and price stability. The overall message from the committee stressed that the costs of underreacting to inflation could be greater than those of taking more aggressive measures now, a theme echoed across the policy discussion.
Despite the durable strength of the economy and the ongoing inflation contest, the recent data suggest a fragile path forward. Analysts note that the economy had entered what many call a technical recession in mid-year, characterized by two consecutive quarterly contractions in gross domestic product, before signs of stabilization began to appear in the months that followed.
In summary, while September brought another step down in the annual inflation rate and a softer monthly rise in prices, the environment remains one of cautious optimism. The mix of higher housing and service costs with lower energy and certain durable goods prices paints a nuanced picture, one that policymakers and consumers will watch closely as the year progresses. [Source: Bureau of Labor Statistics, Federal Reserve minutes, and related economic briefings]