US inflation dropped to its lowest point in over three years in September, with consumer prices rising just 2.4% from a year earlier, the smallest increase since February 2021.
Core inflation, excluding food and energy prices, remains elevated at 3.3% year-over-year, indicating a lingering level of inflationary pressure.
The big picture: Economic projections suggest a gradual decline in inflation, with core inflation expected to reach 3% by December 2024, hinting at ongoing price pressures despite the overall downward trend.
- Housing inflation showed signs of cooling as apartment rental prices grew more slowly, potentially providing some relief to consumers.
- Despite the overall decline in inflation, some products like food, clothing, and airline fares continue to see price increases, contributing to the persistence of inflationary pressures.
- The Federal Reserve is anticipated to continue cutting its benchmark interest rate in response to the evolving inflationary landscape, with expectations of two quarter-point reductions in November and December to help manage economic conditions.
- Reflecting the mixed economic outlook, while food prices have risen significantly since pre-pandemic levels, other factors like increasing wages and incomes offer some relief to household budgets.
