Inflation holds steady as Fed mulls more rate hikes

Consumer prices rose 0.4% in September, for an annual rate of 3.7%, according to data released Thursday by the Labor Department.

The consumer price index (CPI), which is closely watched as an indicator of inflation, rose almost in line with economists’ expectations. The annual inflation rate was flat, with monthly price increases down from August’s 0.6% rise.

The biggest factor behind inflation in September was the rise in housing costs, with prices rising for the second consecutive month, mainly due to rising rents and house prices.

Shelter costs rose 0.6% in September and 7.2% for the year. A 10.6% jump in gasoline prices last month also boosted overall inflation.

October’s inflation report is likely to reassure Federal Reserve officials as they consider whether to raise interest rates again before the end of the year.

Annual inflation remains well above the Fed’s 2% target, and September’s jobs report showed the labor market is much stronger than most economists expected.

Still, inflation for many goods and services has fallen to pre-pandemic levels. The Fed’s interest rate hikes will also do little to curb housing and gasoline inflation, but could still push the U.S. economy closer to recession.


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