US headline and core CPI edge past forecasts in September

The cost of living in the US last month edged past forecasts last month at both the headline and so-called core level.

According to the Department of Labor, in seasonally adjusted terms, the US consumer price index increased by 0.4% on the month and at an annual clip of 8.2%.

Economists had penciled in a 0.2% rise on the month and a year-on-year increase of 8.1%.

In August, headline CPI advanced at a 8.1% pace.

At the core level, which excludes the often-volatile food and energy price components, CPI was up by 6.6% in comparison to a year ago.

That compared to consensus forecasts for an acceleration from the 6.3% clip observed in August to 6.5%.

Commenting on the latest inflation data, Ian Shepherdson, chief economist at Pantheon Macroeconomics, told clients: "Downward pressure on inflation is visible everywhere except in the inflation numbers."

In particular, he highlighted the fact that core goods prices were unchanged, for the best month since March, so that all the 'bad news' came from services.

Even so, the story underlying the persistence of inflation was about the lagged impact of the pandemic, via rental demand, excess margins in goods retailing - especially for cars - and peculiarities in health insurance.

"Our fervent hope is that the October inflation reports—released after the November FOMC, alas - will be good enough to allow the Fed to start signalling clearly that their approach will shift in December, but our base case for now is that December’s hike will be 50bp, and the risk of another 75bp increase has just gone up."