U.S. inflation remained high last month as gasoline prices jumped and the cost of rent and some services fell, painting a mixed picture of the costs facing consumers in an uncertain economy where growth appears steady but hiring is slow.
Consumer prices rose three percent in September from a year earlier, the Labor Department said Friday, up from 2.9 percent in August. Excluding the volatile food and energy categories, core prices also rose three percent, down from 3.1 percent in the previous month.
On a monthly basis, prices rose 0.3% in September, up from 0.4% in the previous month. Core inflation also fell to 0.2% from 0.3% in August.
The Consumer Price Index report is being released more than a week late due to the government shutdown, which is now in its fourth week. The Trump administration has pulled back some Labor Department employees to provide those numbers because they are used to determine annual cost-of-living adjustments for about 70 million Social Security recipients.
The figures reflect less growth than many economists are forecasting and will come as some relief to Federal Reserve officials, who have signaled they will cut their key interest rate at their meeting next week and could do so again in December. Still, inflation remains above the Fed's two percent target, underscoring the high stakes in the Fed's actions.
In September alone, gas prices jumped 4.1 percent from the previous month, a major driver of inflation last month. Food prices rose 0.3 percent, less than in August and 2.7 percent higher than a year ago.
Accessibility is a political issue
Issues of accessibility and cost of basic necessities are gaining political importance. Concerns about rent and food costs played a key role in the race for New York mayor.
And US President Donald Trump, who has credited soaring food prices under former President Joe Biden with helping him win the 2024 election, is considering importing Argentine beef to curb record-high US beef prices that have angered US cattle ranchers.
The price of ground beef has jumped to a record $6.32 per pound, partly due to tariffs on imports from countries like Brazil, which faces a 50 percent tariff. Years of drought, which have reduced cattle numbers, have also led to higher prices.
Even as inflation has fallen sharply from a peak of 9.1 percent more than three years ago, it remains a major concern for consumers. About half of all Americans say food costs are a “major” source of stress, according to an August poll from The Associated Press-NORC Center for Public Affairs Research.
And the business research group Conference Board found that consumers continue to cite prices and inflation in responses to its monthly consumer confidence survey.
US President Donald Trump said he was canceling trade talks with Canada over a television ad that used the late US President Ronald Reagan's own words to send an anti-tariff message to Americans. “CANADIA HAS BEEN DICTED AND FAILED,” Trump wrote on social media, calling the Ontario government ad a “FAKE” and a “FRAUD.”
Still, inflation has not risen as much as many economists feared when Trump first announced the sweeping set of tariffs. Many importers stockpiled inventory before the tariffs took effect, and Trump cut many import taxes, including as part of trade deals with China, Britain and Vietnam.
And many economists, as well as some Fed officials, expect the tariffs to lead to a one-time increase in prices that will disappear by early next year. At the same time, in their opinion, inflation excluding tariffs is decreasing: for example, the increase in rental prices is decreasing on average across the country.
“All bets are off”
However, Trump is introducing tariffs in a way that could lead to more sustained price increases.
For example, the Trump administration is exploring the possibility of imposing 100 percent tariffs on imports from Nicaragua due to alleged human rights abuses. The prospect of such high tariffs is a major headache for Dan Rattigan, co-founder of premium chocolate maker French Broad, based in Asheville, North Carolina.
“We have taken on some significant additional costs,” Rattigan said. The United States produces almost no cocoa, so his company imports it from Nicaragua, the Dominican Republic and Uganda. Imports from Nicaragua were duty-free because the country had a trade agreement with the United States, but now faces an 18 percent import tax.
Cocoa prices have more than doubled in the past two years due to poor weather conditions and disease in West Africa, where more than 70 percent of the world's cocoa is produced. Plus, tariffs are an added blow. Rattigan also pays more for almonds, hazelnuts and chocolate-making equipment from Italy, which has also been hit by tariffs.
French Broad raised prices slightly earlier this year and has no plans to do so again. But after the winter break, “all bets are off … in a very unpredictable business climate,” Rattigan said.
Bakeries and chocolate makers are seeing rising costs for their ingredients. It eats into their profits, but they say quality remains their priority. CBC's Stacey Janzer reports.
