Inflation in the US remains persistently high in September – making another hike in interest rates in November more and more likely. Food is still a price driver, but so are health care and housing costs.
Although inflation in the USA is tending to decline, it is only declining slightly. Compared to the same month last year, consumer prices rose by 8.2 percent in September, according to the Department of Labor. Experts had expected an average of 8.1 percent. In August, the inflation rate was 8.3 percent.
Core inflation, which excludes fluctuating energy and food prices, even rose from 6.3 to 6.6 percent. This rate was also above market expectations. Price increases for housing, food, and medical supplies were the top contributors to the monthly increase across all items. These increases were partially offset by a 4.9 percent drop in gasoline costs.
The dollar rallied across the board after the numbers. For the market strategists of the Landesbank Hessen-Thüringen (Helaba), this indicates a broad-based price increase – which is likely to be viewed critically by many representatives of the US Federal Reserve.
It is likely that the Fed will continue to tighten interest rates, both this year and at the beginning of 2023. “Based on today’s inflation data, it is finally clear that the Fed will raise its key interest rate by 0.75 percent for a fourth time in early November All chances of a lower interest rate step have expired today,” said Thomas Altmann from QC Partners.
In September, the Fed raised interest rates by 75 basis points, bringing them within a range of 3.00 and 3.25 percent, the fastest hike since the early 1980s. With this course, it braces itself against high inflation.
