America’s latest inflation report card just dropped

Inflation is like the protagonists in the last quarter of a horror movie – not out of the woods yet, but there’s a good chance things will be alright.

US inflation fell for its sixth consecutive month in September to reach its lowest level since early 2021, according to new government data. But the reading topped economists’ forecasts.

• Overall inflation was 2.4% on a yearly basis, down slightly from 2.5% in August but higher than the 2.3% expected.
• Core inflation, which excludes the often volatile food and fuel categories, remained elevated in September (+3.3% annually; +0.3% monthly), driven up by rising costs for medical care, clothing, auto insurance, and airline fares.

Zoom in: When it comes to food, inflation has been sticky. Egg prices rose 8.4%, putting the 12-month unadjusted gain at 39.6%. Butter was up 2.8% on the month and 7.8% from a year ago.

However, shelter costs, which make up more than one-third of the total weighting in calculating the CPI, are increasing at a slower pace, which could indicate an easing of broader price pressures ahead, CNBC reports.

👀 Looking ahead… After the latest US inflation reading and jobless report, which was released yesterday and also came in worse than economists expected, markets are pricing in an ~87% chance of a 25-basis-point-cut and a 0% chance of a 50-basis-point-cut following the Fed’s next meeting in November. Those figures were 68% and 32%, respectively, a week ago.