Your weekly grocery bill has gotten even bigger and your bags lighter. Then you go to the gas pump and the tab is higher yet again. And no wonder; an important measure of inflation rose again in September, reaching a new 30-year high of 4.4% on higher food and energy costs.
The personal consumption expenditures (PCE) price index—one of the two most widely known inflation measures (the other being the Consumer Price Index) and the Federal Reserve’s preferred one—rose 4.4% in the year through September, accelerating from August’s 4.2% year-over-year pace and marking a new high since 1991, the Bureau of Economic Analysis said on Friday.
Food prices jumped 1.1% just between August and September, the second-fastest monthly increase since July 2008 (only April 2020 was higher.) Gains in energy prices slowed a bit to a rate of 1.3% in September from 1.9% in August. When food and energy are excluded, the so-called “core” inflation rate held steady at 3.6% for the fourth month in a row.
Inflation has been rising all year, but government officials attribute the gains to pandemic-induced supply bottlenecks and have said price increases would be “transitory,” or temporary. But now, inflation is expected to continue rising and hang around longer than expected, putting the Fed in a difficult spot ahead of its policy meeting next week. The central bank will have to weigh the cost of inflation to consumers and businesses against its other mandate of achieving “maximum employment” when it decides whether it will start easing up on support to the economy.
“Declining living standards due to inflation were spontaneously mentioned by one of every five households, concentrated among older and poorer households,” wrote Richard Curtin, chief economist of the University of Michigan consumer survey, on Friday. Consumers are increasingly worried about prices, with people feeling the most uncertain in 40 years about where inflation will be in a year, he added.
On a year-over-year basis, food prices rose 4.1%, much faster than the 2.8% clip in August. And the USDA revised its outlook upward for the price of many items this year, from beef, oil, and eggs to fish and seafood.
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