US Inflation Reaches 3% for First Time Since January
The annual inflation rate in the United States reached 3% in September, marking its highest since January and slightly higher than the previous month’s 2.9%. Based on official data from the Bureau of Labor Statistics, prices increased by 0.3% month-to-month, supported by higher fuel prices and stable shelter costs. Core inflation, which leaves out energy and food, moderated to 3%, down from 3.1% in August, indicating continued stability in price growth despite sustained energy market volatility.
Energy Costs Lead Price Increases
Energy prices rose by 2.8% year-on-year, the fastest increase since May of 2024, following a rebound in fuel oil and gasoline prices. Gasoline increased by 4.1%, and natural gas rose 11.7%, reversing some of the declines seen earlier this year. Meanwhile, food inflation eased to 3.1%, down from 3.2% in August, as grocery prices eased. Goods such as used cars and trucks fell 5.1%, and transportation services decreased to 2.5% from 3.5%, indicating gradual relief for consumers facing cost-of-living pressures.
Interest Rate Cuts Likely as Inflation Steadies
Analysts say the relatively mild rise in prices strengthens expectations that the Federal Reserve could proceed with its first interest rate cuts since 2023. The Fed has maintained rates at a two-decade high of 5.25%, but with inflation nearing its long-term 2% target, markets anticipate a reduction as soon as mid-November. White House economic adviser Jared Bernstein said the figures prove that the U.S. economy is “cooling without crashing,” while inflation continues to slow across housing, food, and consumer goods.
News at a Glance
- US inflation rises to 3%, its highest rate since January.
- Energy prices increased 2.8%, as fuel oil and gasoline recovered
- Core inflation eased to 3%, keeping rate cuts on track.
- Analysts predict the Fed to reduce interest rates in November as the economy stabilizes.
FAQ
Q1: Why did inflation rise in the US?
It was fueled primarily by rising energy prices, such as fuel oil and gasoline, following previous supply shortages.
Q2: How does this impact interest rate policy?
It underpins expectations that the Federal Reserve will soon ease rates, balancing inflation control with economic growth.
Q3: What prices are stabilising?
Food, transportation, and used car prices have eased, indicating the inflationary peak may be behind the U.S. economy.
Q4: How does this compare to earlier months?
The 3% figure is slightly higher than August’s 2.9% but lower than most predictions of 3.1%.
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