Inflation Stayed Stubbornly High In September, Stocks Dip – Deadline

The Consumer Price Index showed prices in September rose 8.2% year-on-year, a slight decline from 8.3% in August but worse than economists expected. Excluding food and energy, core CPI rose 6.6.%, the highest in forty years.

The disappointing numbers tanked stocks and all but assured two aggressive interest rate hikes by the Federal Reserve by year end. The Fed has hiked rates in a drumbeat in March, May, June, July and September in an effort to tame inflation. The last three have been historically rare 75 basis point increases. Fed officials have indicated that attacking inflation is the priority even if the country tips into recession.

On a monthly basis, prices rose 0.4 percent in September from August, after rising 0.1 percent in August, the U.S. Bureau of Labor Statistics said Thursday. The energy index fell 2.1 percent over the month as the gasoline index declined, offset in part by higher natural gas and electricity. The food index rose 0.8% over the month.

The core index, which measures all items less food and energy, rose 0.6 percent month-on-month in September, same as August but above the 0.4% anticipated, driven by the price of shelter, medical care, motor vehicle insurance, new vehicles, household furnishings and education.

Volatile stocks dipped premarket on the news and major indexes are off lows but still down. The DJIA is off 90 points.

Corporate quarterly earnings start in earnest this week for the big banks. Next week for media and entertainment.