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Economy in Brief

U.S. CPI Marches Higher in September
by Tom Moeller  October 13, 2022

• Y/Y increase is largest in 40 years.

• Core prices remain firm.

• Food prices continue strong; energy costs decline.

The inflation environment is hot. Consumer prices rose 0.4% during September (8.2% y/y) after a 0.1% August rise and stability in July. These readings are below the 1.0% and 1.3% increases logged in May and June, when energy prices were rising. A 0.2% September rise had been expected in the Action Economics Forecast Survey. Prices excluding food and energy strengthened 0.6% in September, the same as in August. The 6.6% y/y gain remained nearly the highest since August 1982. A 0.5% September increase had been expected.

Food prices increased 0.8% (11.2% y/y) for the second consecutive month. Fruit & vegetable prices jumped 1.6% (10.4% y/y) while cereal & bakery product prices strengthened 0.9 % (16.2% y/y). Meat, poultry & fish prices increased 0.7% (7.7% y/y) while the cost of dairy products moved up 0.3% (15.9% y/y). Egg prices declined 3.5% (+30.5% y/y) while nonalcoholic beverage costs increased 0.6% (12.9% y/y).

Offsetting this strength was a 2.1% decline (+19.8% y/y) in energy prices. Gasoline prices fell 4.9% (+18.2% y/y), down sharply for a third straight month, while the cost of fuel oil weakened 2.7% (NSA, +58.1% y/y), off for the fourth consecutive month. Offsetting these declines, natural gas price strengthened 2.9%, up one-third y/y. Electricity prices rose 0.4% and by 15.5% y/y.

Services prices less energy surged 0.8% (6.7% y/y), the strongest monthly gain since August 1990. Transportation services prices jumped 1.9% (14.6% y/y). Medical care services prices rose 1.0% (6.5% y/y), the biggest monthly increase since February, 1984. Medical care service costs rose 1.0% (11.3% y/y), the largest gain since November 1982. Shelter costs increased 0.7% (6.6% y/y) for a second consecutive month, as the owners' equivalent rent of primary residences gained 0.8% (6.7% y/y). Rental costs increased 0.8% (6.7% y/y) but prices for lodging away from home fell 1.0% (+2.9% y/y). Education & communication costs rose 0.2% (1.4% y/y) while recreation service prices also gained 0.2% (4.1% y/y).

Goods prices less food & energy held steady (+6.6% y/y) after advancing 0.5% in August. Household furnishings prices strengthened 0.6% (9.9% y/y) but appliance costs eased 0.3% (+1.7% y/y), off for the third straight month. New vehicle prices increased 0.7% (9.4% y/y) and recreation product prices eased slightly (+4.0% y/y). Medical care product prices eased 0.1% (+3.7 y/y) while apparel prices fell 0.3% (+5.5% y/y).

The Consumer Price Index data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.

What Is the Impact of Monetary Policy on Households' Desired Labor Supply? from the Federal Reserve Bank of Chicago is available here.

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