Annual inflation slowed further in September, inching closer to the Federal Reserve’s goal of 2%. The Consumer Price Index (CPI) for all items rose 2.4% for the 12 months ending in September, before seasonal adjustment, the U.S. Bureau of Labor Statistics (BLS) reported Oct. 10. That’s down slightly from the 2.5% year-over-year increase notched in August.
On a monthly basis, the CPI held at 0.2% in September, the same increase as in August and July. Core inflation—which excludes the more volatile food and energy prices—rose 3.3% year-over-year, after rising 3.2% in August.
Employer Takeaway: The latest CPI report comes after the Federal Reserve cut interest rates last month for the first time since 2020, cutting it by 50 basis points. That was largely good news for employees who have struggled with credit card debt and other financial pressures. Economists say the latest data isn’t likely to change the Fed’s trajectory of rate-cutting.
"Broadly speaking, this latest report supports the narrative that inflation is continuing to cool, albeit at a very gradual pace," said Justin Ladner, senior labor economist at SHRM. "Given that inflation conditions are more or less within the Fed's target range, today's CPI update is unlikely to shift the Fed's thinking regarding interest rate cuts; so long as inflation remains in check, the Fed will likely proceed with a series of cuts over the remainder of 2024 and throughout 2025, though the frequency and extent of these cuts will depend on the evolution of economic and labor market conditions"
Real Earnings
Real average hourly earnings increased 1.5%, seasonally adjusted, from September 2023 to September 2024, the BLS reported separately Thursday. The change in real average hourly earnings combined with a decrease of 0.6% in the average workweek resulted in a 0.9% increase in real average weekly earnings over this period.
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