U.S. inflation pressures further intensified in September

Consumer prices rose again in September, the Labor Department reported Thursday, exceeding expectations and showing that inflation remains a stubborn problem in the final monthly report before the midterm elections.

The Consumer Price Index increased 0.4% in September after rising by 0.1% in August, according to the Bureau of Labor Statistics, meaning the Federal Reserve will likely continue to raise interest rates.

The bureau said increases in shelter, food and medical costs were the biggest contributors to higher prices.

The increases were partially offset by a nearly 5% decrease in gasoline costs. But the food index continued to rise, increasing 0.8 percent over the month.

Core CPI, which excludes food and energy costs, rose 0.6% for the month, leaving core inflation at 6.6%.

The annual inflation rate of 8.2% was down slightly from 8.3% in the previous month, though it remains a burden on consumers. Inflation reached a 41-year high of 9.1% in June.

The Fed has raised interest rates five times this year as it tries to tame historic inflation by throttling back on the economy, a move that risks a recession and job losses. 

But the sour report on Thursday suggests its efforts haven’t done the job despite hopes that improving supply chains and easing demand in some sectors would resolve inflation.

The central bank is expected to consider another increase of a half-point or three-quarters of a point at their meeting in early November.

Dow futures on Wall Street dropped well over 100 points in early trading, and the S&P 500 slumped to its lowest level since November 2020 after the hotter-than-expected inflation report.

Inflation has been a serious pocketbook issue for millions of Americans and a political drag on President Biden and fellow Democrats who control Congress.

Mr. Biden says inflation is a global problem and he is working to accelerate supply chains and slash costs for things like prescription drugs in his signature tax-and-climate bill.

“Today’s report shows some progress in the fight against higher prices, even as we have more work to do,” Mr. Biden said in response to the September numbers. “Fighting the global inflation that is affecting countries around the world and working families here at home is my top priority. Because of my economic plan, the United States is in a stronger position than any major economy to take on this challenge.

Republicans say Democratic policies fueled inflation by pumping virus-relief money into the economy when it was no longer needed, creating an excess of demand when supply chains were struggling to meet it.

The Republican National Committee seized on the report by posting footage of White House officials in 2021 and this year calling inflation transitory or betting that it had peaked and would ease.

Voters have pointed to the economy as the main factor that will determine their vote in November.

Republican candidates are leveraging fears about the Biden economy while Democrats have highlighted threats to democracy or the abortion fight after the Supreme Court decision to overturn Roe v. Wade.

Polls show Democrats tend to have an edge in public opinion around abortion, but the economy could overshadow other issues in the final days of the campaign.

The Labor Department is scheduled to drop a major economic report on the U.S. gross domestic product for the third quarter on Oct. 27 — less than two weeks before Election Day.