Inflation Increased 0.4% in September, Despite Rate Hikes
In September, consumer prices for a wide range of goods and services increased more than anticipated as rising costs continued to drag on the U.S. economy.
According to the Bureau of Labor Statistics, the consumer price index rose 0.4% for the month, more than the 0.3% Dow Jones prediction. The report first shook the financial markets, sending Treasury rates higher and stock market futures falling as traders increased their expectations for future, more aggressive interest rate increases from the Federal Reserve. However, in the morning trade, the earlier losses were reversed, and by 1:30 p.m., the Dow Jones Industrial Average had risen more than 800 points. ET.
The cost of food increased significantly, elevating the headline figure. Like August, the food index rose 0.8% for the month and was up 11.2% from the previous year.
This increase somewhat offset a 2.1% drop in energy prices, including a 4.9% drop in gasoline. According to AAA, the cost of regular gasoline at the pump increased by about 20 cents in October compared to the previous month.
Despite the Federal Reserve‘s intense efforts to rein in price increases and slowdowns in specific important sectors that officials are monitoring, inflation is increasing.
Rates Aside, MBA Sees Job Numbers as Positive for Housing Market
Last week, the number of mortgage applications decreased again, but the reductions were minor compared to the double-digit losses in all indexes on September 30. The Mortgage Bankers Association (MBA) reported that its Market Composite Index, a gauge of the volume of mortgage loan applications, fell 2.0 percent during the week ending October 7 on both a seasonally adjusted and unadjusted basis. The Refinance Index likewise decreased by 2.0 percent from the previous week. At 29.0 percent, the refinance portion of mortgage activity remained constant from last week. The unadjusted and adjusted Purchase Indices decreased by 2.0 percent weekly.
“The news that job growth and wage growth continued in September is positive for the housing market, as higher incomes support housing demand. However, it also pushed off the possibility of any near-term pivot from the Federal Reserve on its plans for additional rate hikes,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.
Next week’s potential market-moving reports are:
- Monday, October 17th – No Report
- Tuesday, October 18th – NAHB Home Builders’ Index, Capacity Utilization Rate
- Wednesday, October 19th – Building Permits, Housing Starts
- Thursday, October 20th – Initial Jobless Claims, Continuing Jobless Claims, Existing Home Sales
- Friday, October 21st – Index of Common Inflation Expectations
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