OCTOBER 15, 2018 – CPI RISES LESS THAN EXPECTED; INFLATION PRESSURE SUBSIDES
US consumer prices rose less than expected in September with rental costs slowing and energy prices falling. The CPI increased 0.1 percent last month after being up 0.2 percent in August. For the running 12-months, CPI is up 2.3 percent, a slowdown from the 2.7 percent 12-month advance seen in August.
The Fed tracks a different measure for inflation for monetary policy, personal consumption expenditures, which exclude food and energy prices. The core PCE rose 2 percent for the 12-months through August, which is exactly the Fed’s 2 percent target. It has been at 2 percent for the last four months.
Though underlying inflation pressures seem to have backed off a bit, the data is not differing much from the trends experienced of late; it is unlikely the numbers will affect the Fed’s intent to raise rates again in December. Another 25 basis point rise in interest rates is anticipated for December.