By A closely watched report on US inflation showed consumer price increases ticked lower on an annual basis during the month of September but “core” prices remained sticky, according to the latest data from the Bureau of Labor Statistics released Thursday morning.
The Consumer Price Index (CPI) increased 2.4% over the prior year in September, a slight deceleration compared to August’s 2.5% annual gain in prices. The yearly increase, which was the lowest annual headline reading since Feb. 2021, came in hotter than economist expectations of a 2.3% annual increase.
The index rose 0.2% over the previous month, matching the increase seen in August and also hotter than economist estimates of a 0.1% uptick.
On a “core” basis, which strips out the more volatile costs of food and gas, prices in September climbed 0.3% over the prior month, stronger than the 0.2% uptick economists had expected, and 3.3% over last year. Core prices rose 0.3% month over month and 3.2% on an annual basis in August.
Shelter moderates, food remains sticky
Notable call-outs from the inflation print include the shelter index, which rose 4.9% on an unadjusted, annual basis, a deceleration from August’s 5.2% increase. The index rose 0.2% month over month after rising 0.5% in August.
Shelter, along with the food index, which rose 0.4% month over month in September, contributed over 75% of the monthly increase in overall inflation.
Sticky shelter inflation has largely been blamed for higher core inflation readings, according to economists. But the moderation from August is an encouraging sign.
“September’s CPI report has good news and bad news for the Fed,” Raymond James’ chief economist Eugenio Aleman wrote in reaction to the report. “The good news is that shelter costs slowed down. …However, it also showed that there are still plenty of upside risks for inflation going forward.”
Read more: What is inflation, and how does it affect you?
Despite the disinflationary path for shelter, the index for rent and owners’ equivalent rent (OER) each rose 0.3% from August to September. Owners’ equivalent rent is the hypothetical rent a homeowner would pay for the same property.
The lodging away from home index fell 1.9% in September, after rising 1.8% in August.
Meanwhile, the energy index decreased by 1.9% in September, after falling 0.8% in August as gas prices declined a sizable 4.1% last month. On a yearly basis, the energy index was down 6.8%.
The food index increased 2.3% in September over the last year, with food prices rising 0.4% month over month — proving to be a sticky category for inflation. The index for food at home rose 0.4% in September after prices held steady from July to August while food away from home increased 0.3%.
Other indexes with notable increases over the last year include motor vehicle insurance (+16.3%), medical care (+3.3%), personal care (+2.5%), and apparel (+1.8%).
The indexes for education, household furnishings and operations, personal care, used cars and trucks, and new vehicles also increased in September.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].
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