Inflation Sits at 8.2% as Core Prices Hit Four-Decade High

U.S. consumer inflation excluding energy and food accelerated to a new four-decade high in September as prices continued to surge, a sign that persistent cost increases are becoming entrenched in the economy. The Labor Department on Thursday said that the so-called core measure of the consumer price index — which excludes volatile energy and food prices — gained 6.6% in September from a year earlier [PDF], up from 6.3% in August. That marked the biggest increase since August 1982. On a monthly basis, the core CPI rose 0.6% in September, the same as in August, and up from 0.3% in July. Investors and policy makers follow core inflation closely as a reflection of broad, underlying inflation and as a predictor of future inflation.

The overall CPI increased 8.2% in September from the same month a year ago, down from 8.3% in August. That was also lower than annual increases of 8.5% in July and 9.1% in June, which was the highest inflation rate in four decades. The CPI measures what consumers pay for goods and services. The retreat of overall inflation from the June high came as gasoline prices cooled. But prices for housing, medical care, food and other items have continued to increase, threatening to keep inflation higher for longer. Housing costs rose by the most since the early 1980s, as a strong labor market continues to push up rental rates. Housing makes up the largest share of the overall and core indexes. Prices for used cars and apparel cooled in September, offering limited relief to consumers from high inflation.