U.S. Consumer Prices Rise Slightly in September

(Reuters) – U.S. consumer prices rose slightly more than expected in September, but the annual increase in inflation was the smallest in more than 3-1/2 years, potentially keeping the Federal Reserve on track to cut interest rates again next month.

The consumer price index increased 0.2% last month after gaining 0.2% in August, the Labor Department said on Thursday. In the 12 months through September, the CPI climbed 2.4%, the smallest since February 2021 following August's 2.5% advance.

Economists polled by Reuters had forecast the CPI edging up 0.1% and rising 2.3% year-on-year.

MARKET REACTION:

• STOCKS: U.S. stock index futures extended a slight loss to -0.35% pointing to a soft open on Wall Street
• BONDS: The 10-year U.S. Treasury yield edged off to 4.0667% and the two-year yield fell to 3.9908%
• FOREX: The dollar index was off 0.09% and the euro was 0.02% firmer

COMMENTS:

ROBERT PAVLIK, Senior Portfolio Manager at Dakota Wealth
"It's a little bit hotter than expected, the top line and the core level, and is a bit of a disappointment for those that were hoping for rate cuts coming at successive meetings. People are thinking the Fed is now going to be concerned about the level of inflation. It's kind of a kick in the shins."

WHITNEY WATSON, Global Co-Head and Co-CIO of Fixed Income and Liquidity Solutions, Goldman Sachs Asset Management
"The September CPI report came in stronger than expected, with core CPI in particular surprising to the upside. Labor market data remains in the driving seat for the Fed."

JAMIE COX, Managing Partner, Harris Financial Group
"Disinflation continues, but anyone who thought the Fed was going to lower rates by another .50 basis points in November is dead wrong."

PETER CARDILLO, Chief Market Economist, Spartan Capital Securities
"The numbers are hotter than we were looking for. It indicates that perhaps inflation is stalling."

BRIAN JACOBSEN, Chief Economist, Annex Wealth Management
"Inflation was a little hotter than expected in September. Food and shelter cost inflation hit hard. The Fed will have to give equal consideration to worries about inflation moving higher and the economy slowing."