Core US Inflation Rises to 40-Year High, Securing Big Fed Hike

[mahatmakanejeeves]

Source: Bloomberg, via Yahoo! Finance

Bloomberg

Core US Inflation Rises to 40-Year High, Securing Big Fed Hike

Reade Pickert
Thu, October 13, 2022 at 8:37 AM · 2 min read

{snip}

A key gauge of US consumer prices advanced to a 40-year high in September, underscoring persistent, elevated inflation that’s squeezing households and pushing the Federal Reserve toward another steep interest-rate hike. ... The core consumer price index, which excludes food and energy, increased 6.6% from a year ago, the highest level since 1982, Labor Department data showed Thursday. From a month earlier, the core CPI climbed 0.6% for a second month. ... The overall CPI increased 0.4% last month, and was up 8.2% from a year earlier. The median forecasts in a Bloomberg survey of economists had called for a 0.4% monthly rise in the core and a 0.2% gain in the overall measure. {snip} Shelter, food and medical care indexes were the largest of “many contributors,” the report said. Gasoline declined.

The report stresses how high inflation has broadened across the economy, eroding Americans’ paychecks and forcing many to rely on savings and credit cards to keep up. While consumer price growth is expected to moderate in the coming months, it’ll be a slow trek down to the Fed’s goal.

Policy makers have responded with the most aggressive tightening campaign since the 1980s, but so far, the labor market and consumer demand have remained resilient. The unemployment rate returned to a five-decade low in September, and businesses continue to raise pay to attract and retain the employees needed to meet household demand.

On the heels of a solid jobs report last week, the CPI report likely cements an additional 75-basis point interest rate hike at the Fed’s November policy meeting. Traders solidified bets for the jumbo-sized hike next month. Stock futures fell sharply and Treasury yields rose following the report.

{snip}

Read more: https://finance.yahoo.com/news/core-us-inflation-rises-40-123213300.html

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This is higher than forecast:

https://www.democraticunderground.com/111694348

TIME (ET) REPORT PERIOD ACTUAL MEDIAN FORECAST PREVIOUS

THURSDAY, OCT. 13
8:30 am Consumer price index Sept. 0.3% 0.1%
8:30 am Core CPI Sept. 0.4% 0.6%
8:30 am Core CPI (three-month SAAR) Sept. -- 6.5%
8:30 am CPI (year-on-year) Sept. 8.1% 8.3%
8:30 am Core CPI (year-on-year) Sept. 6.5% 6.3%

-- -- -- -- -- --

From earlier this morning:

https://finance.yahoo.com/news/stock-market-news-live-updates-october-13-112745635.html

Yahoo Finance
Stock market news live updates: Stock futures higher as investors await inflation data

Dani Romero · Reporter
Thu, October 13, 2022 at 7:27 AM

U.S. stock futures edged higher Thursday ahead of inflation data.

S&P 500 futures (GSPC) rose 0.6% while futures on the Dow Jones Industrial Average (DJI) ticked up 0.6%. The technology-heavy Nasdaq Composite (IXIC) rose by 0.3%. Treasury yields were basically unchanged and the dollar eased against most other currencies.

The Labor Department will release its September consumer price index at 8:30 a.m. ET. Economists surveyed by Bloomberg expect a slight deceleration to 8.1% annually, while the "core" reading, excluding food and energy, to accelerate to 6.5% from a year earlier. That would match March's 39-year peak.

Following the release of August's CPI print, the S&P 500 dropped 4.3%, clocking in its worst day of the year. JPMorgan analysts warned in a note on Thursday that if September's reading comes in higher than the prior month's 8.3%, the S&P 500 could drop as much as 5%.

In any case, investors continue to navigate a murky week marked by corporate earnings and inflation data. On Wednesday, the Producer Price Index (PPI), a measure of prices at the wholesale level, rose 0.4% in September after falling 0.2% during the prior month as inflation persisted.

{snip}

-- -- -- -- -- --

The Labor Department's inflation report for September will offer an indication of whether increases in the cost of living are easing

wsj.com
September Inflation Report Could Give Clues on Next Fed Steps
The U.S. central bank is aggressively raising interest rates to slow price increases.

Link to tweet

[BumRushDaShow]

1. CNBC and others up with the report

Inflation increased 0.4% in September, more than expected despite rate hikes

The consumer price index was expected to increase 0.3% in September, according to Dow Jones estimates.

This is breaking news. Please check back here for updates.

https://www.cnbc.com/2022/10/13/consumer-price-index-september-2022-.html

[BumRushDaShow]

2. WaPo up - and good morning!

Prices climbed 0.4 percent in September over August, despite Fed’s inflation fight

By Rachel Siegel
Updated October 13, 2022 at 8:32 a.m. EDT|Published October 13, 2022 at 6:00 a.m. EDT


Prices rose 0.4 percent in September compared to the month before, despite policymakers’ work to bring down high inflation that has weighed on American families and businesses by slowing the economy with higher interest rates.

September prices rose at a pace of 8.2 percent compared to a year ago, according to data released Thursday by the Bureau of Labor Statistics, a slight slowdown from the summer peak but still well above normal levels.

Inflation remains the economy’s biggest problem, posing a challenge to Democrats in the White House and Congress going into the midterm elections next month. For more than a year, families have swallowed rising costs for groceries, gas, rent and nearly everything in between. Businesses are struggling to offset higher costs for transportation, find enough workers or get around persistent supply chain issues.

Looming over today’s bleak reality is an even more uncertain future, since no one knows whether the Federal Reserve’s efforts to cool down prices, and the broader economy through higher interest rates, will spur a recession. Even President Biden took an unusual step this week in acknowledging the possibility of a recession. “I don’t think there will be a recession. If it is, it’ll be a very slight recession,” Biden said in a CNN interview that aired Tuesday.

(snip)

https://www.washingtonpost.com/business/2022/10/13/fed-inflation-september-cpi/

[mahatmakanejeeves]

3. Good morning to you too.

The check from the Koch brothers cleared, and I have to post something gloomy for them in return.

The actual numbers are slightly above the forecast numbers, so once the members of DU's conspiracy theory crowd have had their morning meds, they will be here to chime in.

[BumRushDaShow]

4. Well you can always send them

here - https://www.democraticunderground.com/10142980891

for some "good news" ?

[OneCrazyDiamond]

9. Koch brother.

David died in 2019.

[mahatmakanejeeves]

10. (Laughing) Thanks for the correction. And good morning. NT

[OneCrazyDiamond]

18. Good morning to you too.

[mahatmakanejeeves]

5. From the source: the U.S. Bureau of Labor Statistics

CPI for all items rises 0.4% in September as shelter and food increase, gasoline falls

In September, the Consumer Price Index for All Urban Consumers increased 0.4 percent, seasonally adjusted, and rose 8.2 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.6 percent in September (SA); up 6.6 percent over the year (NSA).

Economic News Release USDL-22-1990

Consumer Price Index Summary
Transmission of material in this release is embargoed until 8:30 a.m. (ET) Thursday, October 13, 2022

Technical information: [phone] * [e-mail] * www.bls.gov/cpi
Media contact: [phone] * [e-mail]

CONSUMER PRICE INDEX - SEPTEMBER 2022

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in September on a seasonally adjusted basis after rising 0.1 percent in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.2 percent before seasonal adjustment.

Increases in the shelter, food, and medical care indexes were the largest of many contributors to the monthly seasonally adjusted all items increase. These increases were partly offset by a 4.9-percent decline in the gasoline index. The food index continued to rise, increasing 0.8 percent over the month as the food at home index rose 0.7 percent. The energy index fell 2.1 percent over the month as the gasoline index declined, but the natural gas and electricity indexes increased.

The index for all items less food and energy rose 0.6 percent in September, as it did in August. The indexes for shelter, medical care, motor vehicle insurance, new vehicles, household furnishings and operations, and education were among those that increased over the month. There were some indexes that declined in September, including those for used cars and trucks, apparel, and communication.

The all items index increased 8.2 percent for the 12 months ending September, a slightly smaller figure than the 8.3-percent increase for the period ending August. The all items less food and energy index rose 6.6 percent over the last 12 months. The energy index increased 19.8 percent for the 12 months ending September, a smaller increase than the 23.8-percent increase for the period ending August. The food index increased 11.2 percent over the last year.

{snip a huge amount of explanatory details}

Contact Information

For additional information about the CPI visit www.bls.gov/cpi or contact the CPI Information and Analysis Section at 202-691-7000 or [e-mail].

For additional information on seasonal adjustment in the CPI visit www.bls.gov/cpi/seasonal-adjustment/home.htm or contact the CPI seasonal adjustment section at 202-691-6968 or [e-mail].

If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services.

[Crazyleftie]

6. I am not an economist but

is there another means/method/policy other than higher interest rates to slow down inflation. The higher interest rate helps no one and the resulting stock market destroys the economy and retirement savings.

[FBaggins]

7. There are lots of ways to combat inflation

Pretty much all of them are worse than through interest rates.

[IronLionZion]

11. Buy less stuff

it's reduce demand or increase supply. There are limitations to producing more stuff, so people could buy less stuff.

Mass telework programs, fuel efficiency, green energy, etc. could reduce demand for oil. And a secondary effect could even out regional housing demand if people can live anywhere instead of close to their jobs.

Then there's reduce the money supply. Take dollars out of circulation to increase it's value.

Because of labor shortage, we can accept that foreigners aren't actually stealing our jobs and issue more work visas to get more cheap labor for jobs Americans don't want.

[melm00se]

8. While this is a big day-to-day hit,

if you have some spare money (any amount greater than $25 for electronic bonds), it is a flag to buy federal I-bonds which are inflation pegged bonds (currently paying 9.62%) and it will get a new rate at the end of the month.

[honest.abe]

12. Shit.

This is going to get ugly.

[Bayard]

14. Yes

Even though its worldwide, its all Dems fault.

[The Mouth]

15. If Trump were President

The Republicans would be minimizing this, blaming it on the war, pointing out that it's worldwide,
calling it a 'correction' and pointing out how little effect the President has on either inflation or the market. Of course we would be attacking furiously and blaming it all on the prez.....

[Bayard]

20. We're smarter than that.

[mahatmakanejeeves]

13. For the producer price index, see this thread from yesterday:

Wed Oct 12, 2022: Wholesale prices rose 0.4% in September, more than expected as inflation persists

[andym]

16. Fed will follow Paul Volcker 1979-83 and raise interest rates as needed

because it worked to end stagflation. Interest rates will go higher and money supply will be tightened.
We actually had a deep recession back then after the hikes-- Jimmy Carter was blamed and in a way he was responsible, because he appointed Volcker.

On the other hand, Volcker succeeded and it was he who was really responsible for the Reagan economic miracle in late 1983. So logically Carter was really responsible for the so-called Reagan economic miracle.

The problem is that the high interest rates and inflation really hurt Carter (as much as Iran hostages I think) in 1980.

[Igel]

17. Yeah, but that kind of "root causes" thinking leads to a bad conclusion.

That since the stage was set by Nixon and the OPEC, it was really Nixon and OPEC that was response for the '80s boom.

You play with the cards you're dealt.

[andym]

19. There is a difference

Carter appointed Volcker to solve the stagflation problem, knowing it would hurt him politically down the line-- which he commented on at the time, doing what was right for the country long-term.