You consumer prices US USA rose sharply in September and are expected to rise further in the coming months amid rising energy costs, which would cast doubt on the Federal Reserve’s view that rising inflation is transitory.
The consumer price index rose 0.4% last month, after rising 0.3% in August, the Labor Department said on Wednesday. In the 12 months through September, the index increased 5.4%, after increasing 5.3% in August compared to the previous year.
Excluding the volatile components of food and energy, the index rose 0.2%, after increasing 0.1% in August, the smallest gain in six months. The so-called core inflation rose 4.0% compared to the previous year, after rising 4.0% in August.
Economists consulted by Reuters projected an increase of 0.3% for the general index and 0.2% for the core.
Oil prices jumped on Monday to year highs amid a recovery in post-pandemic global demand. Although Brent crude futures fell on Wednesday, prices remained above $80 a barrel. Natural gas prices also rose.
Expensive energy products have added to the wage increase to put upward pressure on inflation. The government said last week that average hourly earnings rose to a seven-month high in September compared to a year earlier, due to a shortage of workers.
With the number of people who voluntarily quit their jobs hitting a record in August and at least 10.4 million vacancies unfilled, wage inflation is likely to rise further.
Fed Chair Jerome Powell has repeatedly said the rise in inflation, for which he blamed bottlenecks in the supply chain, was transitory. Almost two years after the start of the pandemic, there are no signs that the bottlenecks are decreasing.
This has led to shortages of goods such as vehicles and higher consumer prices.
The Fed’s preferred inflation measure for its flexible 2% target, the core PCE, advanced 3.6% in the 12 months ending in August, rising by the same margin for the third month in a row. September data will be released this month.
Last month, the Fed raised its forecast for this year’s core PCE to 3.7%, down from 3.0% in June.