The prices consumers pay for a wide variety of goods and services rose more than expected in September. The Consumer Price Index rose .4% last month and was above expectations.
In the last 12 months the CPI has increased 8.2%. Despite the Federal Reserve’s recent interest rate hikes inflation is not cooling as much as expected. This reinforces expectations the Fed will boost its benchmark funds rate another 75-basis points at its November 2 meeting.
However, excluding volatile food and energy prices, core CPI accelerated .4% for September and was up 6.6% from a year ago. And at least one market analyst thinks that’s the silver lining in the report. He says it’s based on company earnings and salaries which are going up, showing economic growth. John Payne, with Hedge Point Global Markets says, “While the CPI was high and it does encourage the Fed to want to hike or at least keep rates stable, I think the underlying aspect is, one folks are making more money and then two unemployment rates are low not just here but in Europe as well.”
That may be a reason even with food inflation persisting consumers aren’t backing off products like beef, which are usually sensitive to a drop in the stock market. Scott Varilek, Kooima Kooima Varilek, says he’s been encouraged by that. “Prices have held some so far in my mind. So yeah I would have thought I’d heard ore impact than I am now. So I am pleased with how beef is moving how its continuing to move.”
For September beef prices declined .1 % but since January 2021 ground beef is up 23% and sirloin steak is up 15%. However, competing proteins like eggs are up 98% and chicken breasts up 46%, due to avian influenza. Market experts predict food inflation will persist. In fact elevated food AND shelter prices are both predicted to stick around and while there’s been about a 5% drop in the national average gas price, analysts says that will be short lived. So the CPI is likely to remain elevated through the end of the year.
