US inflation is hard to come down! CPI increased by 3.7% year-on-year in September, higher than expected

The U.S. Bureau of Labor Statistics (BLS) announced on the 14th that the consumer price index (CPI) in September increased by a seasonally adjusted 0.6% monthly, in line with Dow Jones economists' expectations, with an annual increase of 3.7%, higher than the expected 3.6%. Relevant data shows that the cost of living in the United States continues to rise, and the inflation rate is still well above the 2% target set by the Federal Reserve (Fed).

Data show that excluding volatile food and energy costs, core CPI increased by 0.3% monthly and 2.6% annually, higher than expected increases of 0.2% and 2.5% respectively. In comparison, overall inflation in August was 3.4% and core inflation was 2.4%.

Soaring energy prices are once again to blame for rising inflation. The energy index jumped 5.2% as tensions between the United States and Iran continue with no end in sight anytime soon.

According to data, gasoline prices increased by 9.1% monthly, much higher than the 3.9% growth rate in August, contributing half of the overall CPI increase. Gasoline prices have risen 34.2% over the past year, while fuel prices have soared 74.2%.

Food prices increased by 0.1% monthly, the same as the previous month, and increased by 2.5% annually. In addition, housing prices increased by 0.4% monthly, and second-hand car and truck prices increased by 0.7% monthly, up from the 0.4% increase in the previous month.

CME Group's FedWatch tool shows that futures traders are betting that the chance of raising interest rates at the Federal Open Market Committee (FOMC) meeting later this month has increased to 44%, the chance of raising interest rates once before the end of this year has risen to more than 96%, and the chance of betting on a 0.5 percentage point increase in interest rates has reached 50%.

This is the last CPI report that FOMC officials have obtained before the policy meeting. On Thursday, the BLS will release a report on the Producer Price Index (PPI), which measures wholesale costs.

Average working hours increased by 3% annually in September, lower than the overall inflation rate. Sonu Varghese, chief macro strategist at Carson Group, pointed out, "With core inflation increasing 3.7% annually in September and 3.2% in the past three years, CPI remains high, and it is not just fuel costs that are rising; in fact we have not yet seen the full impact of rising diesel prices and the artificial intelligence (AI) boom."