- The CPI rose 0.4% month-on-month and 3.7% year-on-year in September, which exceeded established expectations.
- Real wages experienced a decline, with real average hourly earnings falling 0.2% month-on-month.
- The Federal Reserve expressed concerns about inflation and future risks despite not raising interest rates at its September meeting.
September left a remarkable rise in the Consumer Price Index (CPI), which focuses attention on inflation and its effects on the pockets of consumers and the future decisions of politicians. In a report released by the Department of Labor, the CPI rose 0.4% in a month and 3.7% compared to last year, exceeding the previous projections of the Dow Jones, which were set at 0.3% and 3.6%.
Factors Driving Inflation
In a scenario where the cost of living takes center stage, it is important to understand the factors that influence the rise in prices. Housing costs, which represent almost a third of the weight of the CPI, stood at an increase of 0.6% per month and an impressive 7.2% per year. Likewise, the increase in the price of energy and food, with figures of 1.5% and 0.2%, respectively, raised the alerts of the economic balance of households.
Underlying Inflation, a Parameter of the Political Agenda
Core inflation, or core CPI, excludes food and energy prices, due to their volatile nature, and increased by 0.3% per month and 4.1% per year, figures in line with expectations and especially already guarded by the rulers. more reliable view of long-term trends.
Wage Impact and Market Reactions
The increase in the CPI translates into a decrease in the real wages of workers, where the real average hourly earnings experienced a fall of 0.2% per month. In the market, although stocks showed a slight increase, Treasury yields were moderated from previous lows, confirming a scenario of caution and anticipation.
The Federal Reserve Faces an Inflationary Challenge
Federal Reserve officials are at a critical point of analysis regarding the next steps in monetary policy. Although interest rates were not raised, the minutes of the September meeting revealed concerns and divisions about the inflation outlook and associated risks.
Finally, projections of the pace of inflation show a mixed picture. With prices at the wholesale level rising by 0.5% in September and an annual rate of 2.2%, the numbers remain above the 2% inflation target of the Federal Reserve, suggesting an uncertain way forward.
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