U.S. inflation remained high in the past month due to a surge in gas prices, while rents and certain services saw a decrease. This reflects a mixed outlook on consumer expenses in a complex economic environment where growth seems stable, but hiring is sluggish.
According to the Labor Department, consumer prices rose by three percent in September compared to a year ago, slightly higher than the 2.9 percent increase in August. Excluding food and energy, core prices also went up by three percent, a slight drop from the 3.1 percent increase in the prior month.
In September, prices rose by 0.3 percent on a monthly basis, down from a 0.4 percent increase in the previous month. Core inflation also slowed to 0.2 percent from 0.3 percent in August.
The delayed report on the consumer price index is a result of the ongoing government shutdown. The Trump administration brought back some Labor Department workers to compile the data, crucial for determining the annual cost-of-living adjustment for about 70 million Social Security beneficiaries.
The latest figures show a smaller inflation increase than anticipated by many economists. This may provide some relief to Federal Reserve officials who are considering reducing the key interest rate at their upcoming meeting and possibly again in December. Despite this, inflation remains above the Fed’s two percent target, emphasizing the significance of the Fed’s decisions.
Gas prices saw a significant jump of 4.1 percent in September compared to the previous month, contributing significantly to last month’s inflation. In contrast, grocery prices rose by 0.3 percent, lower than the increase in August, but still 2.7 percent higher than a year ago.
The issue of affordability, particularly concerning rents and grocery costs, is gaining political prominence. In New York City’s mayoral race, concerns about these expenses have been a focal point. President Trump, attributing the spike in grocery prices during former President Biden’s term to his election victory in 2024, is contemplating importing Argentine beef to mitigate record-high U.S. beef prices, which has sparked backlash from American cattle ranchers.
The cost of ground beef has reached a record high of $6.32 per pound, partly due to tariffs on imports from countries like Brazil facing a 50 percent duty. Despite inflation decreasing significantly from its peak over three years ago, it remains a significant worry for consumers. A poll by The Associated Press-NORC Center for Public Affairs Research revealed that about half of Americans consider grocery costs a major source of stress.
While some economists initially feared a sharp rise in inflation following Trump’s tariff announcements, many importers stocked up on goods before the tariffs took effect. Additionally, Trump reduced various import taxes through trade agreements with countries like China, the United Kingdom, and Vietnam. Some economists and Fed officials anticipate that the tariffs will cause a temporary price increase, which will likely diminish by early next year.
Nonetheless, Trump’s tariff strategies could result in sustained price hikes. For instance, the administration is contemplating imposing 100 percent tariffs on imports from Nicaragua over alleged human rights violations. This potential increase in duties poses a significant challenge for businesses like French Broad, a premium chocolate maker based in Asheville, N.C.
French Broad has already faced increased costs due to tariffs on imports from Nicaragua, the Dominican Republic, and Uganda, where they source cocoa. Cocoa prices have doubled in the past two years due to adverse weather conditions in West Africa, the primary cocoa producer globally. The tariffs have exacerbated the situation, leading to higher prices for ingredients like almonds, hazelnuts, and chocolate-making equipment from Italy, which also faces tariffs.
While French Broad has raised prices slightly this year, the company anticipates further challenges post-holiday season in an unpredictable business landscape.