September’s inflation report: prices rise faster than expected!
The US Bureau of Labor Statistics reported that inflation in the US, as measured by the Consumer Price Index (CPI), declined to 8.2% on a yearly basis in September from 8.3% in August. This reading came in higher than the market expectation of 8.1%.
Year-over-year percentage change in the Consumer Price Index, according to the Bureau of Labor Statistics.
In the meantime, the Core CPI, which excludes volatile energy and food prices, was up 0.6% and 6.6%, on a monthly and yearly basis, respectively. Both of these figures surpassed analysts’ estimates.
How did the markets react?
Reaction to the updated CPI data was subdued in the first hour after the release of the data. For example, the hot inflation data provided a boost to the greenback with the initial market reaction. As of writing, the $US Dollar was up 0.28% on a daily basis at 113.58.
But the main U.S. indices started their way down. For example, the $SPX500 and the $DOW are rapidly losing points.
This is due to the fact that inflation has risen compared to the previous period. This means that the hawkish Fed policy is not effective enough, and soon the key rate will be raised again.
Why is it important for investors and traders?
Fresh inflation data showed that consumer prices climbed more quickly than expected, bad news for the Federal Reserve as it tries to bring the most rapid price increases in four decades back under control. Overall inflation climbed 8.2% in the year through September, more than what economists expected. The rate remains extremely high.
Fed officials and Wall Street analysts will be more closely watching the monthly figures, including what happened between August and September. While the annual numbers reflect what has happened cumulatively over the past 12 months, the monthly data gives a clearer snapshot of how prices are evolving in real-time. Those monthly figures offered reasons for worry.
In particular, they could be a factor in the continuation of the US Federal Reserve’s hawkish policy.
The increase in the rate causes a natural market reaction. In particular, in the near future, the $US dollar may rise by a few more points and the key stock indices ($DOW, $NASDAQ, $SPX500) may lose another 1% to 2%.
Summary
- The Consumer Price Index rose 8.2 percent in the year through September, another stubbornly high result that spooked the markets.
- Inflation came in faster than expected in September, bad news for the Fed.
- It is worth worrying about the fact of the next hawkish increase in the key rate of the Fed, which is guided by inflation data.
- In the near future, the $US dollar may rise by a few more points and the key stock indices ($DOW, $NASDAQ, $SPX500) may lose another 1% to 2%.
