Consumer Price Increases Cooled, but Not as Much as Expected

The Consumer Price Index is moderating, but September’s report contained both good and bad news for policymakers.

Price increases slowed in September, but the cool-down was less than economists had expected, in the latest reminder that bringing inflation back under control remained a somewhat bumpy process.

A Consumer Price Index report released on Thursday showed that overall inflation was 2.4 percent on a yearly basis, down slightly from 2.5 percent previously. That was somewhat higher than economists had forecast.

After stripping out food and fuel costs, which can be volatile from month to month, a “core” inflation measure picked up slightly to 3.3 percent, up from 3.2 percent in August.

While the report underscored that price increases were not yet fully tamed, September’s data did not change the basic picture for officials at the Federal Reserve. Inflation still shows clear signs of gradually coming under control.

Consumer price increases have cooled sharply from their peak of 9.1 percent in the summer of 2022, even though September’s slowdown was less dramatic than expected. And the fresh report offered some encouraging details under the hood: A closely watched measure of housing costs is finally beginning to moderate on a monthly basis. Because shelter makes up such a big part of overall inflation, that could help to make the ongoing slowdown more durable.

“Inflation doesn’t slow in a straight line, but the overall trend in inflation is one of slowing,” said Gennadiy Goldberg, head of U.S. rates strategy at T.D. Securities. “There is some good news and some bad news: The good news is that shelter inflation slowed notably.”