Although gasoline and used cars prices continue to fall, due to faster rise in housing and food prices, the US CPI year-on-year and core CPI year-on-year in September both exceeded expectations. The core CPI hit a 40-year high year-on-year, indicating that inflation is still hot, which may push Fed to raise interest rates again next month, and there is even a possibility of a sharp increase in interest rates in December.
On October 13, U.S. Bureau of Labor Statistics released data showing that the US CPI in September rose 8.2% year-on-year, higher than the market's expectations of 8.1%, and the previous value was 8.3%; CPI in September rose 0.4% month-on-month, and was twice the market's expectations of 0.2% , and was significantly higher than the previous value of 0.1%.
After excluding the volatile food and energy prices, 9 core CPI rose 6.6% year-on-year, not only higher than the market expectations of 6.5% and the previous value of 6.3%, but also hit a new high since August 1982. core CPI rose 0.6% month-on-month, higher than the market expectations of 0.4% . After the release of
data, the swap contract linked to the date of the Fed meeting fully digested the 75 basis points interest rate hike in November. The yield on the U.S. two-year to five-year Treasury bonds rose by more than 10 basis points. US stock futures fell in the short term, while Nasdaq futures fell nearly 3%. USD index short-term rises by about 80 points and is now at 113.56.
service inflation continues to rise, and owners' equivalent rent rose by 0.8% month-on-month in September
Overall, on the one hand, commodity inflation slowed down, and on the other hand, service inflation continued to rise.
report shows that housing, food and health care prices have increased the most.
Food prices rose 0.8% month-on-month for the second consecutive month, up 11.2% from the same period last year; health care prices rose 1% month-on-month; owners' equivalent rents rose 0.8% month-on-month in September, the largest single-month increase since June 1990. In addition, the prices of new cars continue to rise sharply, and air ticket prices are also rising.
gasoline and used cars prices have dropped. gasoline prices fell 4.9% month-on-month, and used car prices fell for the third consecutive month, down 1.1% in September after falling 0.1% in August. In addition, the clothing index fell by 0.3% month-on-month, and the communication index fell by 0.1% month-on-month.
It is worth noting that although gasoline prices fell in September, they have begun to rise again since then.
Housing inflation rate rose 6.59% year-on-year, higher than 6.24% last month, setting a record high. Rents rose 7.21% year-on-year, up from 6.74% last month, the highest level on record.
Meanwhile, the actual wages of Americans fell for the 18th consecutive month.
High inflation has spread throughout the economy, which will force the Fed to take more radical interest rate hikes
Analysts said that the September CPI report emphasized that high inflation has spread throughout the economy, eroding American wages and forcing many to rely on savings and credit cards to maintain economic growth. While CPI is expected to slow down in the coming months, reaching the Fed's 2% target will remain a slow process.
The Fed has taken its most radical austerity move since the 1980s, but labor market and consumer demand have remained resilient so far. In September, the U.S. unemployment rate fell to its lowest level in 50 years, and businesses continued to raise wages to attract and retain needed workers.
Following last week's strong non-farm data release, the September CPI report could consolidate the Fed's decision to raise interest rates by another 75 basis points at its November policy meeting. Traders have now consolidated their bets on a massive rate hike next month, and swap contracts linked to the date of the Fed's meeting have been fully priced at 75 basis points in November.
, and Wall Street News previously mentioned that once the CPI in September is higher than market expectations, coupled with the same stronger than expected employment market conditions, it may trigger market concerns about the Federal Reserve's further rate hikes, and is expected to raise interest rates by 75 basis points in December.
Today, rental prices have become a key factor affecting the final direction of U.S. inflation. Economists believe that the housing sub-item in the CPI report will be at a high level for a considerable period of time given the time difference between rent and housing prices in real time changes, as well as the time difference reflected in the Labor Department data.
Bloomberg Economics expects that the year-on-year growth rate of the main housing components of will not peak until the second half of next year.
The development of geopoliticals may also keep inflation high. OPEC+ recently announced production cuts, and a possible ban on gasoline exports from the Biden administration could lead to higher oil prices.
The Russian-Ukrainian conflict continues to affect the supply of commodities such as wheat, and the White House is also considering imposing a ban on Russian aluminum. Aluminum is a key component in cars and iPhones.
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