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CPI snapshot … In September, the U.S. Consumer Price Index increased by 0.2%, slightly higher than anticipated.

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This puts the annual inflation rate at 2.4% which is the lowest since February 2021.  CPI data can be confusing because rates might go up month-over-month, but since these incremental increases are smaller, they pull down the annual rate. When this happens it means that inflation is stabilizing or cooling, meaning price increases are less frequent or significant compared to last year.

Inflation impacts different pockets of the economy in different ways. Specifically, housing, food, and energy have seen the highest surges in year-over-year costs. Entertainment and leisure, apparel, and tech are less inflationary. In September, food prices saw a notable 0.4% jump, especially in categories like meat, poultry, and eggs, contributing significantly to the overall rise. Fruit and vegetable prices also rebounded, showing a 0.9% increase from August. Despite these food price hikes, energy prices offered relief as gasoline prices dropped 4.1% for the month according to the Bureau of Labor Statistics. Core CPI, which excludes volatile food and energy prices, rose by 0.3% and sits at 3.3% on an annual basis, slightly above forecasts.  The Fed remains focused on inflation trends and the labor market. A recent hurricane and a Boeing strike led to an unexpected rise in jobless claims to 258,000, the highest since August 2023. These disruptions could cloud labor market data through year-end.  While inflation appears to be moderating, food and housing costs are areas to watch as they have substantial impacts on consumer spending and economic growth. According to Ipsos research, the vast majority of American voters, regardless of party affiliation, cite the economy and inflation as the most important issues that will determine their vote in next month’s election.