UPDATE 3 - US consumer inflation up 2.4% annually in September, slowing from 2.5% in August

ADDS COMMENTS FROM CONFERENCE BOARD CHIEF ECONOMIST

By Ovunc Kutlu

ISTANBUL (AA) - Consumer inflation in the US annually rose 2.4% in September, the slowest annual increase since February 2021, according to data released Thursday.

The consumer price index (CPI), which measures changes in the prices of goods and services from consumers’ perspective, also showed a slowdown from the annual gain of 2.5% seen in August.

The figure, however, came higher than market estimates of a 2.3% increase, while it is also a sharp decline from the 9.1% annual gain recorded in July 2022 that was the highest since November 1981.

On a monthly basis, CPI showed an increase of 0.2% in September, and also came higher than market expectations of a 0.1% gain.

That figure showed a monthly increase of 0.2% in August.

"The shelter index increased 4.9 percent over the last year, accounting for over 65 percent of the total 12-month increase in the all items less food and energy index," the Labor Department's Bureau of Labor Statistics said in a statement.

"The energy index decreased 6.8 percent over the past 12 months. The gasoline index fell 15.3 percent over this 12-month span, and the fuel oil index fell 22.4 percent over that period," it added. "In contrast, the index for electricity increased 3.7 percent over the last 12 months, and the index for natural gas rose 2.0 percent."

Core CPI, which excludes volatile food and energy prices, gained 0.3% in September from the previous month, also coming in higher than market estimates of 0.2%, and following a 0.3% increase in August.

Annually, core CPI climbed 3.3% in September, also coming in higher than market expectations of 3.2%, and slightly accelerating from a 3.2% year-on-year gain recorded in August.

- Rent, medical care, electricity, gas

"The index for owners' equivalent rent and the index for rent both rose 0.3 percent over the month," said the statement. "The lodging away from home index fell 1.9 percent in September, after rising 1.8 percent in August."

The medical care index, meanwhile, rose 0.4% in September, after declining in each of the previous two months, according to the Bureau of Labor Statistic.

While the electricity index climbed 0.7% during the month, so did the natural gas index, it added.

Annually, the index for electricity rose 3.7% over the last 12 months, and the index for natural gas rose 2%.

- 'Lower interest rates, low unemployment'

Lael Brainard, head of the US National Economic Council, said consumer inflation has fallen to where it was before the coronavirus pandemic.

"We keep making progress, with inflation returning to pre-pandemic levels, 16 million jobs created, lower interest rates, and low unemployment," she said in a statement released by the White House.

"Our economy has grown 3.2% per year under the Biden Harris Administration – stronger than during the previous administration. Incomes are up almost $4,000, after adjusting for inflation," she added.

Brainard said President Joe Biden and Vice President Kamala Harris will keep fighting to lower costs by building new homes to lower rent, capping prescription drug costs, reducing health insurance premiums, and lowering taxes for middle-class families.

She also said the US administration is working around the clock to help families affected by Hurricane Helene and Hurricane Hilton, which just hit Florida.

- 25 basis points interest rate cut 'most probable' in November

Dana Peterson, chief economist at research organization The Conference Board, said CPI inflation continued to slow on a year-on-year basis in September, but picked up excluding food and energy.

"Stubborn services inflation reflects glacial slowing in shelter costs, but also rising costs for other services caused by structural changes in the economy," she said in a statement.

"The data suggest that the PCE deflator, which the Federal Reserve bases monetary policy from, likely also will reveal continued stickiness in underlying inflation in September when released at the end of this month," she said.

Peterson said The Conference Board continues to believe that macroeconomic data suggest a 25 basis points interest rate cut remaining "the most probable" outcome at the Fed's November meeting.