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U.S. Consumer Prices Still Rising Briskly

Recent inflation data underscores how a strong labor market is underpinning consumer demand, which risks keeping prices above the Fed’s target.

By Reade Pickert | October 12, 2023 at 10:32 AM
Photo: A shopper at a grocery store. Photographer: Cole Burston/Bloomberg A shopper at a grocery store. Photographer: Cole Burston/Bloomberg

U.S. consumer prices advanced at a brisk pace for a second month, reinforcing the Federal Reserve’s intent to keep interest rates high in order to bring down inflation.

The so-called core consumer price index (CPI), which excludes food and energy costs, increased 0.3 percent in September, Bureau of Labor Statistics (BLS) data showed Thursday. Economists favor the core gauge as a better indicator of underlying inflation than the overall CPI. That measure climbed 0.4 percent, boosted by energy costs.

Recent inflation data underscores how a strong labor market is underpinning consumer demand, which risks keeping prices above the Fed’s target. At their meeting last month, a majority of officials saw a need for one more interest rate hike this year, and they may maintain that bias—despite a recent surge in bond yields—if inflation doesn’t cool further.

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