United States: Inflation drops to lowest level since February 2021 in September
Latest reading: Inflation came in at 2.4% in September, which was down from August’s 2.5% and the weakest inflation rate since February 2021. The cooling of price pressures was largely driven by a slower increase in prices for housing and a sharper drop in transport prices. However, inflation was still slightly above the Fed’s 2.0% target and above market expectations.
Annual average inflation edged down to 3.1% in September (August: 3.2%). Meanwhile, core inflation ticked up to 3.3% in September from the previous month’s 3.2%, also above market expectations.
Lastly, consumer prices increased 0.18% over the previous month in September, coming in below August’s 0.19% increase.
Panelist insight: On the monetary policy implications, TD Economics’ Thomas Feltmate said:
“With progress on the inflation front stalling and [the latest] employment report still showing a relatively sturdy labor market, the Fed is likely to slow the pace of rate cuts next month and deliver two additional quarter-point cuts by year-end. While further cuts are in the pipeline for 2025, the Fed will remain data dependent.”