(NEXSTAR) – Inflation in the US accelerated in September, according to the latest data from the Ministry of Labor show. It has kept the cost of housing and daily necessities high and ensures that the Federal Reserve will raise interest rates, probably aggressively.
Although consumer prices, excluding variable food and energy costs, jumped 6.6% year-on-year in September – the fastest pace in four decades – some expenses are cheaper than they were at the same time last year.
In stores, where the prices of many items have increased by 10% to 20% In 2008, uncooked beef steaks fell by almost 5%. Raw roast beef fell by about 2.8%. Fresh vegetable costs are up roughly 9% overall, but tomatoes are down 1% compared to last year.
Some entertainment and recreation expenditures also saw price declines.
Smartphone prices experienced the biggest drop, 21% compared to last year. Televisions are close, down almost 18%. Among personal computers and smart home assistants, prices are lower by around 3.6%.
Outside the home, admission to sporting events decreased by 9.5%.
Costs for many of the items listed by the Department of Labor are also starting to decline, based on month-to-month data. These include breakfast cereals, ground beef, eggs, milk, coffee, butter, gasoline, furniture and used vehicles. A key factor is that supply chain disruptions have also eased for many large retailers such as Walmart and Target have a discount some items to clear out excess inventory.
However, the drop in prices among some expenditures does not reduce the pressure of rising inflation.
“We still have no evidence that inflation is slowing,” said Matthew Luzzetti, an economist at Deutsche Bank. “Let alone the clear and convincing evidence the Fed is looking for.”
Inflation has increased family bills for groceries, rent and utilities, among other costs, causing hardship for many and deepening pessimism about the economy despite strong job growth and historically low unemployment.
September’s inflation data essentially guarantees that the Fed will raise its key short-term rate by three-quarters of a point for the fourth straight time at its next meeting in early November. The Fed has already raised its key short-term rate by 3 percentage points since March, the fastest pace of increase since the early 1980s. Those increases are aimed at raising the cost of borrowing for mortgages, auto loans and business loans and reducing inflation by slowing the economy.
At their last meeting in late September, Fed officials forecast they would raise their key rate to around 4.5% early next year, which would be the highest level in 14 years. Some economists now predict the Fed will need to raise rates even further to defeat what appears to be an entrenched onslaught of inflation. The risk is that such higher borrowing costs would push the economy into recession.
Until consumer demand slows further, forcing more companies to compete on price, costs for many products are likely to remain high, economists say.
“There’s a saying in economics that prices go up like rockets and come down like feathers,” said Eric Swanson, a former Fed economist who is now a professor at the University of California, Irvine. “You can kind of see it.”
The Associated Press contributed to this report.