Consumer prices rise as inflation continues to impact markets

According to latest Consumer Price Index report from the U.S. Bureau of Labor and Statistics, rising shelter costs and fuel prices are propelling inflation above market expectations.

The financial markets are looking closely at inflation numbers on Thursday, with the latest Consumer Price Index (CPI) report from the U.S. Bureau of Labor & Statistics indicating a persistent upward trend in prices.

According to the report, consumer inflation experienced a notable increase of 0.4 percent in September, contributing to a year-on-year rise of 3.7 percent, and slightly exceeding market expectations — which anticipated a reading of 3.6 percent.

September’s CPI report marks a third consecutive month-over-month increase in consumer inflation. The CPI reported a 0.6-percent increase in August as well as a 0.2 percent increase in July 2023. July 2023 was the first month to see a rise in inflation since June 2022.

Notably, shelter costs emerged as the largest contributor to the overall increase in prices, accounting for more than half of the CPI surge. Gasoline prices, too, registered a notable jump of 2.1 percent.

American Farm Bureau Chief Economist Dr. Roger Cryan shed some light on the implications of this inflationary trend:

“The overall consumer prices are retail prices are up 3.7% from a year ago according to the report that came out this morning,” Cryan noted. “The so-called ‘core inflation,’ which is minus volatile relatively volatile food and energy prices was up 4.1% which is double the Fed’s long-term inflation target at 2%.”

Dr. Cryan further emphasized that, for farmers, the impact of inflation depends on where they’re positioned in the market. Inflation affects consumers, cutting their purchasing power, which, in turn, can negatively impact demand— thus, indirectly affecting farmers. Additionally, he highlighted that rising interest rates could pose a significant challenge for the agricultural sector, as higher short-term rates result in larger expenses for farmers in covering their operating loans. Longer-term higher interest rates can complicate farm investments.

When questioned about future interest rate hikes and their impact, Dr. Cryan expressed hope that the Fed would reconsider.

“With this modestly good inflation news, they may hold off again, and some of the other numbers they get before the meeting at the end of October comes out positive for this decision,” he said. “Maybe we won’t get another increase, and again, I hope.”