Core Prices Soar Above Expectations, Keeping Inflation Sky-High

"Core" inflation, which excludes food and energy, rose over estimates to a 40-year high in September, according to the BLS (BLS).

Core inflation grew 6.6% year-over-year and 0.6% month-to-month in September, exceeding year-over-year estimates by 0.1%. The Consumer Price Index (CPI) decreased 8.2% year-over-year despite rising 0.4% from August. Economists projected September CPI would fall 8.1% year-over-year, down from 8.3% in August.

The BLS attributes the drop in overall inflation to a decline in energy prices, although they are still high at 19.8% year-over-year. The overall food index fell from 11.4% in August to 11.2% in September.

Both headline and core inflation are considerably above the Federal Reserve's 2% objective, CNBC reported Wednesday. Goldman Sachs warned investors in late September that even if the Fed tames inflation without causing a recession or large increase in unemployment, the Fed is likely to continue aggressive rate hikes through the end of the year, lifting rates from the current baseline of 3.25% to 4.5%.

In September, the U.S. added 263,000 jobs, the weakest rate of the year. Bank of America's senior U.S. economist Michael Gapen cautioned Monday that unemployment might soar if the Fed maintains rate hikes, costing the U.S. 175,000 jobs each month early next year.

“No doubt the Fed still has its work cut out for them, and if tomorrow's CPI read is hot, don't be surprised if some investors come to grips with how long the road to tamer inflation may be,'' said Mike Loewengart, head of portfolio management at Morgan Stanley.

The preceding is a summary of an article that originally appeared on DAILY CALLER.

Written by Staff Reports

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