Consumer prices in the U.S. rose 0.4% on a monthly basis in September, the highest reading in three months, and twice the market expectation of a 0.2% gain. The consumer price index slowed to an annual rate of 8.2%, the lowest in seven months, but also above expectations. Increases in prices of shelter (0.7%), food (0.4%) and medical care services (1%) were the largest of many contributors to the increase. The food index continued to rise, jumping 0.8%. These increases were partly offset by a 4.9% decline in gasoline costs, but prices of natural gas (2.9%) and electricity (0.4%) increased.
As for food inflation:
- Fruit and vegetable index jumped 1.6% — 6.8% increase in the price of lettuce and 5% rise in apple prices. Potato prices rose 3.5%.
- Meat index rose 0.7% — 1.8% hike in pork prices and a 0.6% rise in poultry prices. Beef prices declined 0.1% in September.
- Dairy prices were 0.3% higher in September.
- Sugar and sweets were up 1.8%.
- Fats and oils rose 1.2%.
- Egg prices, which have surged 30.5% over the past 12 months due to an outbreak of avian influenza, fell 3.5% last month.
- Cereal and bakery products rose 0.9%.
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Core inflation, excluding food and energy costs, rose 0.6% from August and 6.6% annually, the highest since 1982.
Following the hotter-than-expected consumer inflation data on the heels of Wednesday’s higher-than-anticipated producer prices, traders raised their bets on another big interest rate hike in November. Traders priced in more than 90% odds of another 75-basis-point rate hike by the Fed next month.
