Background on the Consumer Price Index (CPI)
The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. The CPI is one of the most frequently used statistics for identifying inflation (upward pressure on prices). When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a rise in prices.
September Inflation Data
According to data released by the U.S. Department of Labor on Friday, inflation in the United States continued to rise in September but was less than anticipated. The Consumer Price Index (CPI) increased to 3.0% annually, up by a tenth from August, primarily due to rising gasoline costs.
- Annual inflation rate: 3.0%
- Monthly price increase: 0.3%
- Gasoline index rose by 4.1% from August to September
- Food index increased by 0.2%
Both annual and monthly inflation data fell slightly below economists’ average forecasts according to Dow Jones Newswires and The Wall Street Journal.
Expert Opinion
Diane Swonk, Chief Economist at KPMG, commented on the housing costs data, stating, “It’s certainly good news that we had a nice surprise on the downside, with housing costs helping us a lot.” However, she also noted that inflation for goods has been increasing for four consecutive months and that service sector inflation remains “somewhat rigid.”
Impact of Government Shutdown on Economic Data
The recent U.S. government shutdown has disrupted most official data releases, making the September inflation report particularly crucial for economists and market operators to gauge the health of the world’s largest economy.
The ongoing political standstill in Washington, with Republicans refusing to meet Democrats’ demands for expanding subsidies that make healthcare affordable for millions, has further complicated matters.
Key Questions and Answers
- Q: What is the current annual inflation rate in the US? A: The annual inflation rate in the US is 3.0%.
- Q: What factors contributed to the rise in September’s inflation? A: The primary factors were the increase in gasoline costs (4.1% rise from August to September) and a modest 0.2% rise in food prices.
- Q: How do these inflation figures compare to economists’ predictions? A: The actual inflation data fell slightly below the average predictions of economists surveyed by Dow Jones Newswires and The Wall Street Journal.
- Q: How has the recent government shutdown affected economic data releases? A: The shutdown has largely halted the release of most official economic data, making the September inflation report especially significant.
