CHICAGO — The September 2024 consumer price index (CPI) revealed inflation to be at 2.4% year-over-year in the month, slowing closer to the Federal Reserve’s target of 2%. This is the lowest the rate has been since February 2021, according to the U.S. Bureau of Labor Statistics. Although the CPI report shows inflation cooling, the slow was less than expected.
The CPI for all urban consumers rose 0.2%, seasonally adjusted, and with the index for food increasing 0.4% and shelter by 0.2%, these two items accounted for more than 75% of the monthly all items increase. This is higher than the .01% that was forecasted.
“Unfortunately, or preferred trend measure has increased to 1.98% in September after increasing 1.87% in August, thus moving in the wrong direction compared to the monthly and year-over-year measures,” said Peter Rupert, Ph.D., and economy professor at the University of California, Santa Barbara. “It should be noted, however, that our measure is just below the Fed’s 2% target.”
The energy index dropped 1.9% over the month, along with energy commodities, gasoline, and fuel oil also seeing decreases, while energy services, electricity, and utility (piped) gas service saw 0.7% increases.
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USA Today reported that the gasoline price decreases the U.S. has seen the last few months are a result of slowing global growth and record U.S. oil production.
While airline fares saw a 3.2% increase, hotel rates saw a 1.9% drop. Another item that saw a decrease was medical care commodities (-0.7%).
“The CPI saw big declines in energy, falling 1.9% over the month and 6.8% year over year. Fuel oil fell 6.0% over the month and 22.4% year over year. It is well known that both food and energy prices are quite volatile so that looking at core (excluding food and energy) may be a better indicator. While the year over year number changed little, both the monthly and trend measures saw a significant bounce, rising to 3.81% (was 3.42% in August) and 3.05% (was 2.68% in August), respectively,” Rupert said.
According to the Real Earnings Summary from the bureau, real average hourly earnings increased 1.5% year-over-year in September for all employees (seasonally adjusted). The Employment Situation Summary for September revealed that while total non-farm payroll employment rose by 254,000, the unemployment rate changed little from the previous month at 4.1%.
Bloomberg reports that the jobless claims that were recently published “showed a much-bigger-than-expected increase of 258,000, against the media forecast for 230,000. While this was likely affected by the impact of hurricanes, one market participant said the jump – to the highest level in more than a year – was hard to ignore.”
“This increase in jobless claims will make Fed decision-making a bit more problematic as they balance inflation vs. the labor market,” Dr. Rupert said.
