Inflation in the United States accelerated in September, with the cost of housing and other necessities intensifying pressure on households, wiping out pay gains that many have received, and ensuring that the Federal Reserve will keep raising interest rates aggressively. Consumer prices rose 8.2% in September, compared with a year earlier, the government said Thursday. On a month-to-month basis, prices increased 0.4% from August to September after having ticked up 0.1% from July to August, per the AP. Yet excluding the volatile categories of food and energy, so-called core inflation jumped last month—a sign that the Fed's five rate hikes this year have so far done little to cool inflation pressures. Core inflation climbed 0.6% from August to September and 6.6% over the past 12 months.
The yearly core figure is the biggest increase in 40 years. Core prices typically provide a clearer picture of underlying price trends. Major US markets swung sharply lower, with Dow Jones Industrial Average futures moving from several hundred points up to a 400-point decline in seconds. Markets in Europe tumbled as well. Thursday's report represents the final US inflation figures before the Nov. 8 midterm elections after a campaign season in which spiking prices have fueled public anxiety, with many Republicans casting blame on President Biden and congressional Democrats. Inflation has swollen families' grocery bills, rent, and utility costs, among other expenses, causing hardships for many and deepening pessimism about the economy despite strong job growth and historically low unemployment.
The September inflation numbers aren't likely to change the Fed's plans to keep hiking rates aggressively in an effort to wrest inflation under control. The Fed has boosted its key short-term rate by 3 percentage points since March, the fastest pace of hikes since the early 1980s. Those increases are intended to raise borrowing costs for mortgages, auto loans, and business loans and cool inflation by slowing the economy. Minutes from the Fed's most recent meeting in late September showed that many policymakers have yet to see any progress in their fight against inflation. The officials projected they'd raise their benchmark rate by an additional 1.25 percentage points over their next two meetings in November and December. Doing so would put the Fed's key rate at its highest level in 14 years.
Meanwhile, the number of Americans applying for unemployment benefits rose slightly last week but remains historically low, reports the AP. Jobless claims for the week ending Oct. 8 rose by 9,000 to 228,000, the Labor Department reported Thursday. The four-week moving average ticked up by 5,000 to 211,500. Considered a proxy for layoffs, applications for jobless aid have remained historically low since the initial purge of more than 20 million jobs at the start of the coronavirus pandemic in the spring of 2020. Some recent employment data has indicated that the job market may be cooling slightly, but overall, it remains the healthiest part of an economy that's been wobbling since early this year. (Read more inflation stories.)