Consumer Prices Up 0.4% in September, Inflation at 3.7%

Washington, DC, October 12, 2023- The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% in September on a seasonally adjusted basis, after increasing 0.6% in August, the U.S. Bureau of Labor Statistics reported. Over the last 12 months, the all items index increased 3.7% before seasonal adjustment.

The index for shelter was the largest contributor to the monthly all items increase, accounting for over half of the increase. An increase in the gasoline index was also a major contributor to the all items monthly rise. While the major energy component indexes were mixed in September, the energy index rose 1.5% over the month. The food index increased 0.2% in September, as it did in the previous two months. The index for food at home increased 0.1% over the month while the index for food away from home rose 0.4%. 

The index for all items less food and energy rose 0.3% in September, the same increase as in August. Indexes which increased in September include rent, owners' equivalent rent, lodging away from home, motor vehicle insurance, recreation, personal care, and new vehicles. The indexes for used cars and trucks and for apparel were among those that decreased over the month.

The all items index increased 3.7% for the 12 months ending September, the same increase as the 12 months ending in August. The all items less food and energy index rose 4.1% over the last 12 months. The energy index decreased 0.5% for the 12 months ending September, and the food index increased 3.7% over the last year.

“The consumer-price index rose at a 0.4% pace in September from the prior month and 3.7% from a year earlier, the Labor Department said Thursday,” according to the Wall Street Journal. “The monthly gain represents a cooling from August’s 0.6% increase, which was driven by higher energy prices. The 12-month rate was the same as in August.

“When excluding volatile food and energy items, so-called core prices increased 0.3% in September, the same as the prior month’s increase and a continuation of mild readings through the summer months. Core prices rose 4.1% in September over the prior year, down from August’s 4.3%.

“Federal Reserve officials in recent days have signaled that they are likely to hold short-term interest rates steady at their next meeting, Oct. 31-Nov. 1, because a run-up in long-term interest rates over the past month could slow the economy. In effect, if the rise in borrowing costs is sustained, that would substitute for rate rises.

“Officials likely would feel more comfortable about the decision to hold rates steady with stronger evidence that price pressures and economic activity are cooling. The upshot is that they are unlikely to signal plans to pause rate increases indefinitely or to rule out a rate rise in December. Officials raised rates most recently in July to a 22-year high.”