A report from Washington hits us up saying that the US inflation rates in the United States of America increased more than expected to about 40-year high in the month of September. Such a scenario compelled the Federal Reserve to raise the interest rates in a more aggressive manner in order to bring the concerning situation under control. Business Outreach Magazine is eyeing the probable cause for the matter which can be related to the current global geo-political condition. 

The core consumer price index that does not include the food and the energy expense, increased to about 6.6% this year in 2022 when compared with 2021. The US Labor Department says the rise to be the highest since the year 1982. A month earlier, the core increase of CPI hiked about 0.6% for the month to be coming second. 

Last month, the overall consumer price index increased 0.4% and about 8.2% from the earlier year. A survey from Bloomberg indicates that the economists called a 0.4% rise monthly in the core CPI and a 0.2% in the total measure.

Current Situation :

Such an advance has a broader perspective, where housing, food, and medical index figures being the major contributors. The report also said that the price of gas and pre-owned cars reduced. Challenging times like these have made the American taxpayers rely mostly on savings and credit cards to back their livelihood.

It is estimated that the growth of consumer price will tend to be moderate in the upcoming months and it will be a rather slower trajectory according to the goals set by the Feds. The policy makers have aggressively performed with tightening campaigns since the 1980s. But the demand of the consumer along with the labor market has been resilient.

On the brighter side, the unemployment rate was at a 5-years low in the month of September and employers were able to attract skilled individuals by increasing their pay and retaining their interest. The November policy of the Feds is said to have a 75-basis note hike in interest resulting in stock falls and treasury yields rising. 

Key Takeaways :

US inflation data says that the shelter cost constitutes to about a third of the total CPI index, and had a 0.7% rise in the second month. Shelter rent rising along with the owner’s rent was aligned together on a record annually. Economists can see that the housing component increased for some time with the home prices and rent figures changing in real-time in the Labor Department’s report. 

In the second month, food costs increased about 0.8% and about 11.2% from the last year. The cost of used cars and gasoline decreased in September and the cost of new cars increased. The 2% target by the Feds fis based from a separate inflation chart and the CPI is supervised by the policymakers. The prices of food and energy are volatile and the core CPI thus stands as a reliable vertical to measure inflation in the US.  

Due to the Organization of the Petroleum Exporting Countries (OPEC) + cutting oil production, the Biden administration is showing dissatisfaction towards Saudi Arabia which might result in more gas prices. The war in Russia and Ukraine is disrupting wheat supplies coupled with the White House thinking of banning Russian aluminum used in cars and iPhones.