ARLINGTON, Va.—Overall consumer prices rose 0.1% in September – increasing for the sixth consecutive month – but year-over-year growth slowed sharply to 2.3%. NAFCU Research Assistant Yun Cohen attributed the deceleration to vehicle and energy prices.
"Prices of used cars and trucks unexpectedly plunged 3% in September, its largest decline since 2003," Cohen said in a NAFCU Macro Data Flash report. "… Energy prices also declined during the month and contributed to the temporary slowdown."
Cohen added that the Bureau of Labor Statistics earlier this year changed a calculation method related to used vehicle prices, which likely contributed to some volatility in the component. Going forward, she expects vehicle prices to rebound with replacements needed after recent storms.
Data from the Bureau show that core prices (excluding food and energy costs) increased 0.1% in September compared to the previous month. Year-over-year core CPI growth remained at 2.2%, Cohen said.
Tariffs Expected to Have Effect
Energy prices declined 0.5% in September, following a 1.9% increase in August. From a year ago, energy prices were up 4.8%. Food prices were unchanged in September; year-over-year growth increased 1.4%.
"However, prices continue to rise overall and recently imposed tariffs will likely add to inflationary pressure," Cohen said. "… Given the tight labor market and building inflation, the FOMC is almost certain to raise rates again later this year."
The Federal Open Market Committee raised rates last month to a range of 2% to 2.25%. The committee meets again Nov. 7-8 and Dec. 18-19; its latest projection indicates another rate hike in December.