Inflation Remains High
US inflation rose 8.2% year-over-year in September, according to government data released yesterday. The metric estimates the change in a currency's purchasing power; higher inflation means consumers can buy fewer goods with each dollar they spend (see 101).
The growth is primarily driven by price increases in shelter (+0.8%), food (+0.8%), and medical care (+1%). A continued decline in gas prices (-4.9%) and energy (-2.1%) helped to offset the increases. See data in charts here. The core consumer price index, which removes volatile food and energy prices, rose 6.6% year-over-year, the highest since 1982. The news puts continued pressure on the Federal Reserve to raise interest rates to help curb rising prices. The Fed is expected to announce three more rate hikes.
Separately, cost-of-living adjustments to Social Security payments are set to rise 8.7% in 2023, the highest jump since 1981. The average recipient will receive monthly paychecks of $1,827.