US consumer prices rose 0.4% in August to September as costs of new cars, food, gas and restaurant meals jumped
WASHINGTON – Another jump in consumer prices in September sent inflation up 5.4% from a year ago, matching the biggest increase since 2008 as entangled global supply lines wreak havoc.
US consumer prices rose 0.4% in August to September as the cost of new cars, food, gas and restaurant meals jumped.
The Labor Department said Wednesday that the annual increase in the Consumer Price Index matched readings in June and July, the highest in 13 years. Excluding volatile food and energy categories, core inflation rose 0.2% in September and 4% from a year ago. Core prices hit a three-decade high of 4.5% in June.
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Ongoing price gains add pressure to the Federal Reserve, whose officials have repeatedly said the increase will be fleeting, and on President Joe Biden, who is facing an economy of slow job gains and high inflation. Biden has been accused by Republicans of fueling inflation with his $1.9 trillion rescue package enacted in March this year.
The unexpected surge of inflation this year reflects increasingly higher prices for food and energy, but also for furniture, cars, television and other largely imported goods. COVID-19 has closed factories in Asia and slowed US port operations, forcing container ships to be anchored at sea and forcing consumers and businesses to pay more for goods that May not come for months.
Cathy Bosjanic, an economist at the consulting firm, Oxford Economics, said, “A price rise stemming from ongoing supply chain constraints amid strong demand will keep inflation high, as the supply (and) demand imbalances are only gradually resolved.” Is.” “While we share the Fed’s view that this is not the start of an upward wage-price spiral, we see inflation to remain consistently above 3% through mid-2222.”
The latest inflation data makes it even more likely that the Fed will soon begin reducing its $120 billion a month in bond purchases aimed at keeping long-term interest rates low. Most analysts expect the Fed to announce such a move at its next meeting on November 3.
Higher prices are also outweighing the salary benefits many are able to get from businesses, which are having to pay more to attract employees. Average hourly wages in September rose 4.6% from a year earlier, a healthy increase, but not enough to keep up with inflation.
For older Americans, however, the increase resulted in the biggest increase in benefits in 39 years. The government said on Wednesday that monthly Social Security checks would increase by 5.9% next year. So will other benefits for veterans and retirees.
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A good sign in September was that prices fell or turned lower in ranges that were initially pushed hard by the pandemic. Those declines kept core price increases from worsening.
Prices of used cars fell 0.7% last month, the second straight decline, after cost soaring in the summer as consumers, unable to find or buy a new car, turned to use instead.
The cost of hotel rooms, car rentals and airline tickets also fell last month, as a Delta spike in COVID-19 cases limited travel plans. Car rental prices went up in the summer after several companies sold parts of their rental fleet. Clothing prices fell 1.1% in September, giving consumers some respite after a hike earlier this year.
However, new cars are becoming more expensive, with prices up 1.3% in September and 8.7% from a year ago. This is the biggest 12-month increase in new car prices since 1980. A shortage of semiconductors has halted vehicle production and left fewer cars on dealer lots.
Home furniture prices, which have faced major shipping delays, rose 2.4% in September alone, the biggest increase since 1988. In the last 12 months, the cost of furniture has increased by 11.2%, the highest since 1951.
The price of shoes rose 0.5% in September and has risen 6.5% in the past year. Children’s shoes are up 11.9%, a record-high gain in data that spans the 1950s. Most of the shoes are imported and are likely to run into supply constraints.
Restaurant owners are paying higher wages to lure workers who have become elusive in the pandemic and are paying more for food. And for the fifth month in a row, which led to the price increase in September, 0.5% has risen. The cost of a meal at a full-service restaurant has increased by 5.2% over the past year, an unprecedented jump as long as the record has been kept.
Gas prices rose 1.2% last month and are up more than 42% from a year ago. Electricity prices rose 0.8 per cent in August-September.
Housing costs also rose at a strong clip, as builders say they can’t get all the parts and labor needed to build new homes as quickly. Rents increased by 0.5% in September and house prices increased by 0.4%. If continued, those growths would put significant upward pressure on prices, as those two measures account for about one-third of the CPI.
Inflation is well above the Fed’s target of 2% annually. Chairman Jerome Powell has repeatedly said that price gains should be “less” next year, bringing inflation closer to the target.
Fed Vice Chairman Richard Clarida echoed that view in remarks Tuesday.
“The unwelcome surge in inflation this year, once these relative price adjustments are completed and the hurdles are removed, will ultimately prove to be largely temporary,” he said.
Atlanta Federal Reserve Chairman Rafael Bostic joked in separate comments Tuesday that “transient” is now seen as the equivalent of a curse word at the Atlanta Fed. Bostic said the price hikes mostly reflect the pandemic’s impact on supply chains and added that they should eventually fade, but will take longer than many Fed officials initially expected.
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The White House said on Wednesday it has helped boost an agreement to keep the Port of Los Angeles open 24 hours a day, seven days a week, in an effort to ease supply constraints and ease price pressure.
Ports in Los Angeles and Long Beach, California, account for 40% of all shipping containers entering the U.S. as of Monday, with 62 ships at the two ports and 81 waiting to dock and unload, according to the Marine Exchange of Southern California. .
AP writer Josh Bok contributed to this story.