US inflation falls to 2.4% in September

Created on October 10, 2024

• US inflation for September rose 2.4% from a year earlier, slightly higher than expected.
• Inflation fell to its lowest level since February 2021.
• The US Dollar rose against major currencies today.

US inflation falls for sixth consecutive month

The US Consumer Price Index (CPI) continued its decline, falling slightly in September. Inflation fell to 2.4% from a year earlier, down from 2.5% in August, but above the market estimate of 2.3%. The drop in inflation was largely due to lower petrol prices, while food and transport prices rose. On a monthly basis, the CPI rose 0.2% in September, unchanged from August but above the market estimate of 0.1%.

Core CPI, which excludes food and energy and is considered a better gauge of inflation trends, ticked higher at 3.3% y/y, up from 3.2% in August and above the market estimate of 3, 2% On a monthly basis, the core CPI rose 0.3%, unchanged from August and above the market estimate of 0.2%.

The Federal Reserve should be pleased with the inflation data. The CPI has now fallen for the sixth month in a row and is at its lowest level since February 2021. Inflation is still above the Federal Reserve’s 2% target, but inflation is moving in the right direction and the Fed is more focused on the labor market, in especially for non-agricultural wages. After two weaker-than-expected releases, there was a surprise rebound last week as September non-farm payrolls rose to 254,000, up from a revised 159k and beating the market estimate of 140k.

Today’s inflation data didn’t have much of an effect on rate cut odds, as the probability of a quarter-point cut in November remains around 85%. Federal Reserve minutes released Wednesday indicated that some members voted for a half-point cut in September, even though they might have been more comfortable with a modest quarter-point cut. Fed Chairman Powell had near-unanimous support for the half-point cut, but it is unlikely to be repeated if the labor market remains strong for the rest of the year.

US dollar rises, stock market falls after CPI report

Today’s inflation report was within expectations and had little effect on the US dollar or the US stock market.

The US dollar posted slight gains against major currencies. The USD/JPY currency pair showed the most volatility, rising as much as 0.45% following the inflation report before reversing directions. USD/JPY is currently trading at 148.60, down 0.18%.

The US stock market opened a little while ago and saw slight losses.

The Nasdaq 100 fell 80 points (0.40%) to 20,189.

The S&P 500 index fell 13 points (0.23%) to 5778 points.