CUNA economics: Headline inflation remains unchanged

CUNA Senior Economist Dawit Kebede issued the following statement in response to the Labor Department’s September Consumer Price Index Report:   

“Headline inflation remained unchanged in September at 3.7% over the last 12 months, the same increase as in August. Core inflation, which excludes volatile food and energy items, decreased from 4.3% in August down to 4.1%. The index for services contributed the most to the monthly increase, followed by energy, and food items. On the other hand, the index for goods continued its decline for the fourth consecutive month.  

“Housing inflation increased in September to 0.6% from 0.3% in August, accounting for half of the increase of the monthly headline inflation. This is unexpected, as the impact of shelter on the overall inflation was anticipated to be muted at this time after showing declining trends in the past few months. Shelter is a lagged indicator in the inflation report, and some of the declines in housing prices observed early in the year are not yet reflected.  

“The declining core inflation indicates that prices are moving towards the Federal Reserve's target. The annualized core inflation rate for the last three months is now less than 3%. This coupled with declining wage growth and recent increases in bond yields, suggest that the Federal Reserve may not need more rate hikes to control prices.”