Inflation in the US rose more than expected last month

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Image Source: National World

Last month, US consumer prices increased more than anticipated, showing that the struggle against inflation in the biggest economy in the world is still far from complete.

The rate of price growth, or inflation, was 8.2% in the 12 months ending in September, down from 8.3% in August.

The number was still larger than expected despite the decline.

The US central bank is trying to control inflation, driving up the dollar’s value and increasing borrowing prices worldwide.

The rate is significantly higher than the central bank’s 2% target, so the Federal Reserve will probably keep hiking interest rates to tamp down inflation.

Due to a decrease in gas prices at the pump, inflation in the US has decreased once again after peaking at 9.1% in June.

Last month, prices for both used automobiles and apparel decreased.

But the problem is still having an impact on other areas of the economy. For example, over the last 12 months, grocery prices have increased by 13%, and housing and healthcare expenses have also increased significantly.

With food and energy excluded, inflation increased by 6.6%, which is the fastest rate since 1982.

The US Federal Reserve has increased interest rates five times since March. However, in recent months, the Fed has chosen to raise rates by unusually substantial amounts, which has unnerved financial markets and caused abrupt slowdowns in areas like the housing market.

The Fed intends to dampen demand, particularly for luxury things like automobiles and homes, and relieve pricing pressures by raising the cost of borrowing.

But the Fed also runs the danger of sending the economy into a recession by slowing down activity. Due to the fact that inflation has so far shown to be obstinately resistant to the Fed’s efforts, analysts believe that this conclusion is becoming more likely.

President Joe Bien has attempted to argue that slowing economic activity is a good transition from the growth surge that followed the pandemic, pointing to substantial job creation and low unemployment. In addition, midterm elections are set to take place in November. However, the Democrats are feeling the effects of their economic worries.

Inflation will affect Christmas this year

The family of Brooke Riske began making plans to build a new house in Virginia over a year ago, but they were forced to cut back when they discovered that the cost of materials was increasing and borrowing fees had suddenly increased.

The 36-year-old mother of two described how her family’s decision to settle for a smaller property and a larger mortgage than they had originally planned forced them to abandon their initial plans to build a house.

Other effects of the growing cost of living include higher grocery expenses and her daughter’s dance attire. However, education professional Brooke claims her pay has not changed.

After the report, stock markets plunged dramatically before rising in the middle of the day.

Numerous analysts expressed their optimism that the Fed will pause the rate of rate increases following its next meeting and cited indicators like a drop in shipping costs as evidence that inflation may be abating.

In spite of rising worries about how the rate rises, which tend to divert money to the US and strengthen the dollar, will affect the rest of the world, where many nations are battling their own inflation issues, they indicated rates are likely to move higher until the trends are obvious.

Read Also: US employers added 263,000 new jobs 

In a speech on Wednesday, US Treasury Secretary Janet Yellen, a former head of the Fed, acknowledged the concerns and stated that while domestic concerns will direct policy, the US remained “attentive” to the global situation.