U.S. inflation for September might show little signs of relief for consumers

The September inflation report, whatever it shows, isn’t likely to change the Fed’s plans to keep hiking rates aggressively in an effort to wrest inflation under control.

Any Americans hoping for relief from months of punishing inflation might not see much in Thursday’s government report on price increases in September.

Lower gas prices will probably reduce overall consumer inflation for a third straight month. But measures of “core” inflation, which are closely watched because they exclude volatile food and energy costs, are expected to return to a four-decade peak.

Economists have estimated that the government’s consumer price index jumped 8.1 per cent in September from 12 months earlier, according to a survey by the data provider FactSet. That is a distressingly large gain, though below the 9.1 per cent year-over-year peak that was reached in June.

Core prices are estimated to have risen 0.4 per cent from August to September, slower than the previous month but still a much faster pace than was typical before the pandemic. Measured over the past 12 months, core prices are forecast to have surged 6.5 per cent, up from 6.3 per cent in August. That’s far above the two per cent inflation that the Federal Reserve has long set as its target rate.

Thursday’s report will provide the final inflation figures before the Nov. 8 midterm elections after a campaign season in which spiking prices across the economy have fed widespread public anxiety, with many Republicans casting blame on President Joe Biden and congressional Democrats.

Inflation has escalated families’ grocery bills, rents and utility costs, among many other expenses, inflicting hardships on households and deepening gloom about the economy despite strong job growth and historically low unemployment.

As the election nears, Americans are increasingly taking a dim view of their finances, according to a new poll by The Associated Press-NORC Center for Public Affairs Research. Roughly 46 per cent of people now describe their personal financial situation as poor, up from 37 per cent in March. That sizable drop contrasts with the mostly steady readings that had lasted through the pandemic.

The September inflation report, whatever it shows, isn’t likely to change the Fed’s plans to keep hiking rates aggressively in an effort to wrest inflation under control. The Fed has boosted its key short-term rate by three per centage points since March, the fastest pace of hikes since the early 1980s. Those increases are intended to raise borrowing costs for mortgages, auto loans and business loans and cool inflation by slowing the economy.