According to data released by the US Department of Labor on Thursday, after seasonal adjustments, the Consumer Price Index (CPI) in September increased by 0.4% month on month, lower than the 0.6% increase in the previous month, with an expected value of 0.3%; The year-on-year increase is 3.7%, with an expected value of 3.6%. After excluding food and energy prices, the core CPI increased by 0.3% month on month, which remained unchanged from the previous data; The year-on-year increase was 4.1%, both of which were in line with expectations. The changes in core CPI data have attracted more attention from the Federal Reserve and investors.
In the sub data, the housing index, which accounts for about one-third of the CPI weight, is the main reason for this increase in inflation. In September, the housing index rose 0.6% month on month and 7.2% year-on-year. Energy costs decreased by 0.5% year-on-year, but increased by 1.5% month on month, with gasoline prices increasing by 2.1% and fuel prices increasing by 8.5%. Food prices increased by 3.7% year-on-year and 0.2% month on month, marking the third consecutive month of increase. In addition, excluding energy services, the price of services has increased by 0.6%, with a year-on-year increase of 5.7%. This sub index is seen as a key factor in the long-term direction of inflation.
The increase in the CPI index means that employee salaries have decreased in terms of actual purchasing power. According to another report released by the Ministry of Labor on Thursday, after seasonal adjustments, the actual average hourly wage in September decreased by 0.2% compared to August. Compared to the same period last year, it increased by 0.5%.
As investors weighed the latest inflation data, US stocks opened slightly lower on Thursday with light trading volume. Among them, the Dow fell 0.06%, the Nasdaq fell 0.03%, and the S&P 500 index fell 0.03%. In the bond market, the yield curve of US bonds has flattened. The 10-year US Treasury yield remains at 4.606%, while the two-year US Treasury yield is at 5.077%.
Andrew Patterson, senior economist at Vanguard Group, stated that although the downward trend in core inflation continues, the CPI index is stronger than expected. We will continue to pay attention to the transmission impact of high energy prices on broader inflation levels in the coming months.
The market welcomed the US Producer Price Index (PPI) on Wednesday. After seasonal adjustments, the PPI in September increased by 2.2% year-on-year, the highest increase since April this year; The month on month increase was 0.5%, lower than the previous increase. Excluding food and energy prices, the core PPI increased by 2.7% year-on-year and 0.3% month on month, both higher than the previous data.
At the same time, the number of first claims for unemployment benefits in the United States last week was 209000, unchanged from the previous value and expected to be 210000.
After the release of September CPI data, according to the CME Federal Reserve observation tool, the market expects a probability of 11.7% for the Federal Reserve to raise interest rates by 25 basis points in November, and a probability of 88.3% for the Fed to remain silent.
The September meeting minutes released by the Federal Reserve on Wednesday show that the Fed is expected to continue implementing tightening policies until it is confident that inflation is falling back to the target level of 2%. All participants agreed that the Federal Reserve should be "cautious" in its interest rate decisions, and future data will help determine whether further interest rate hikes are needed in the coming months. Federal Reserve officials also unanimously believe that in order to continue reducing inflation, interest rates should be maintained at a high level for a "period of time". Among them, disciplinary officials believe that the focus should shift to the duration of maintaining high interest rates, rather than the magnitude of the increase. However, although there is still a possibility of another rate hike, there are differences within the Federal Reserve regarding the next policy direction.
Several Federal Reserve officials will deliver speeches on Thursday, expected to provide more clues about the outlook for monetary policy.