October 17, 2022 — Inflation Remains High through September


September inflation was up 0.4 percent month-over-month and up 8.2 percent year-over-year. This is down from 9 percent in June, but still close to the highest levels experienced since the early 1980’s.  The news puts pressure on the Federal Reserve to keep raising interest rates to stabilize prices.

The core consumer price index (excluding energy and food) was up 6.6 percent year-over-year (0.6 percent for the month), the highest since 1982. The food index was up 11.2 percent from a year ago, while energy prices were down 2.1 percent.

The Fed is expected to announce three more rate hikes with the next one coming in early November. Expectations are for a fourth consecutive 0.75 percent rise, with another 0.5 to 0.75 percent possible in December. The central bank has raised benchmark rates 3 full percentage points since March, with rates expected to peak next summer at 4.55 percent.

Economists estimate the probability of a US recession in 2023 is 63 percent, up from 49 percent in July. This is due rising interest rates leading to higher unemployment and an economic turndown. The good news is that they believe a recession will be short-lived. The economy is expected to grow 0.4 percent in 2023 and 1.8 percent in 2024.