Eggs are on display at a grocery store in Greenbrae, California on September 25, 2024.
Justin Sullivan | Getty Images
The pace of price increases over the past year unexpectedly accelerated in September as policymakers considered their next move on interest rates, according to a report from the Labor Department on Thursday.
The Consumer Price Index, a broad measure of the cost of goods and services across the U.S. economy, rose 0.2% on a seasonally adjusted basis for the month, bringing annual inflation to 2.4%. Both readings were 0.1 percentage points higher than the Dow Jones average.
The annual inflation rate dropped by 0.1 percentage points from August.
Core prices, which exclude food and energy, rose 0.3% for the month and an annual rate of 3.3%. Both core readings were also 0.1 percentage points above forecasts.
The bulk of the increase in inflation – more than three-quarters of the increase – came from a 0.4% increase in food prices and a 0.2% rise in housing costs, the Bureau of Labor Statistics said in a news release. This offset a 1.9% decline in energy prices.
Other factors contributing to the increase included a 0.3% increase in the cost of used cars and a 0.2% increase in the cost of new cars. Prices of medical care services increased by 0.7%, and prices of clothing increased by 1.1%.
The news comes as the Federal Reserve has begun lowering its benchmark interest rate. The central bank is expected to continue cutting interest rates after cutting interest rates by half a percentage point in September, but questions remain about the speed and magnitude of the cuts.
Federal Reserve officials have become more confident in their goal of lowering inflation to 2%, while expressing concerns about labor market conditions.
In other economic news Thursday, initial jobless claims unexpectedly rose to 258,000 in the week ended October 5. That’s up from last week’s forecast of 230,000.
Continuing claims, which trailed one week, rose to 1.861 million, an increase of 42,000.
On the inflation front, rising prices across various food categories point to the sticky nature of inflation.
Egg prices rose 8.4%, bringing the 12-month unadjusted gain to 39.6%. Butter is up 2.8% this month and 7.8% higher than the same period last year.
However, housing costs are still higher than Fed officials expected this year, rising 4.9% annually, a decline that could signal that broader price pressures will ease in the future. This category accounts for more than one-third of the total weight in the CPI calculation.
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