The U.S. inflation rate in September came in at a hotter than expected year-over-year rate of
8.2%, increasing the likelihood that the U.S. Federal Reserve will continue its aggressive
interest rate hikes into next year.
The core inflation rate, which excludes volatile food and energy prices, increased 6.6% in
September from a year ago, the highest level since 1982, according to Labor Department data.
The growth in consumer prices in America was broad based, with shelter, food and medical
care all rising on a monthly and annualized basis. Prices for gasoline and used cars declined in
September.
The latest inflation data likely guarantees another 75-basis point interest rate increase by the
U.S. Federal Reserve at both its November and December meetings this year.
While the U.S. central bank has undertaken the most aggressive rate hikes this year since the
early 1980s, the labour market and consumer demand have remained stubbornly resilient.
The unemployment rate was at a five-decade low in September, and businesses continue to
raise pay to attract and retain employees in the U.S.
Shelter costs rose 0.7% in September for a second straight month, while food costs rose 0.8%
for a second consecutive month and were 11.2% higher than a year ago.
Central bank officials in the U.S. have repeatedly emphasized the need to get inflation under
control, even if that means higher unemployment and an economic recession.
The determination to crush inflation has led to a darkening economic outlook globally. Earlier
this week, the International Monetary Fund (IMF) said it expects economic growth in 2023 to
slow to the weakest level since the 2008-09 global financial crisis.
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