Little Sign of Relief Expected in September Inflation Data

WASHINGTON (AP) -- Any Americans hoping for relief from months of punishing inflation might not see much in Thursday's government report on price increases in September.

Lower gas prices will probably reduce overall consumer inflation for a third straight month. But measures of "core" inflation, which are closely watched because they exclude volatile food and energy costs, are expected to return to a four-decade peak.

Economists have estimated that the government's consumer price index jumped 8.1% in September from 12 months earlier, according to a survey by the data provider FactSet. That is a distressingly large gain, though below the 9.1% year-over-year peak that was reached in June.

Core prices are estimated to have risen 0.4% from August to September, slower than the previous month but still a much faster pace than was typical before the pandemic. Measured over the past 12 months, core prices are forecast to have surged 6.5%, up from 6.3% in August. That's far above the 2% inflation that the Federal Reserve has long set as its target rate.

Thursday's report will provide the final inflation figures before the Nov. 8 midterm elections after a campaign season in which spiking prices across the economy have fed widespread public anxiety, with many Republicans casting blame on President Joe Biden and congressional Democrats.

Inflation has escalated families' grocery bills, rents and utility costs, among many other expenses, inflicting hardships on households and deepening gloom about the economy despite strong job growth and historically low unemployment.

As the election nears, Americans are increasingly taking a dim view of their finances, according to a new poll by The Associated Press-NORC Center for Public Affairs Research. Roughly 46% of people now describe their personal financial situation as poor, up from 37% in March. That sizable drop contrasts with the mostly steady readings that had lasted through the pandemic.

The September inflation report, whatever it shows, isn't likely to change the Fed's plans to keep hiking rates aggressively in an effort to wrest inflation under control. The Fed has boosted its key short-term rate by 3 percentage points since March, the fastest pace of hikes since the early 1980s. Those increases are intended to raise borrowing costs for mortgages, auto loans and business loans and cool inflation by slowing the economy.

Minutes from the Fed's most recent meeting in late September showed that many policymakers have yet to see any progress in their fight against inflation. The officials projected that they would raise their benchmark rate by an additional 1.25 percentage points over their next two meetings in November and December. Doing so would put the Fed's key rate at its highest level in 14 years.

Along with lower gas prices, economists expect to see that the prices of used cars tumbled in September after small declines the previous two months. Wholesale used car prices have dropped for most of this year, though the declines have yet to show up in consumer inflation data. (Used vehicle prices had soared in 2021 after factory shutdowns and supply chain shortages reduced production.)

Large retailers, too, have started offering early discounts for the holiday shopping season, after having amassed excess stockpiles of clothes, furniture and other goods earlier this year. Those price cuts might have lowered inflation in September or will do so in the coming months.

Walmart has said it will offer steep discounts on such items as toys, home goods, electronics and beauty. Target began offering holiday deals earlier this month.

Yet prices for services -- particularly rents and housing costs -- are remaining persistently high and will likely take much longer to come down. Health care services, education and even veterinary services are still rising rapidly in price.

"Services price increases tend to be more persistent than increases in the prices of goods," Raphael Bostic, president of the Federal Reserve Bank of Atlanta, noted in remarks last week.

Rising rental costs are a tricky issue for the Fed. Real-time data from websites such as ApartmentList suggest that rents on new leases are starting to decline.

But the government's measure tracks all rent payments -- not just those for new leases -- and most of them don't change from month to month. Economists say it could be a year or longer before the declines in new leases feed through to government data.