Economists are forecasting a moderation in overall inflation, as the pace of increase in prices for various goods and services showed signs of slowing down last month. The Consumer Price Index (CPI) is projected to have climbed 3.6 percent from a year earlier, marking a slower pace than the 3.7 percent rise witnessed in August. The "core" measure, which excludes the often volatile food and fuel prices, likely rose by 4.1 percent, a slight decrease from the previous 4.3 percent.
These predictions come in the wake of ongoing efforts by Federal Reserve policymakers to curb inflation and slow economic growth through interest rate hikes. Since March 2022, the Fed has been steadily increasing borrowing costs, which now stand between 5.25 and 5.5 percent. Policymakers are currently contemplating whether an additional quarter-point rate increase is necessary before maintaining policy stability.
Despite these measures, some investors remain skeptical about another rate hike, particularly in light of recent market rate movements. Fed Governor Christopher J. Waller suggests that financial markets might take on some of the burden of controlling inflation.
Even as economists predict a slowdown in inflation, several major corporations continue to raise their prices. Walt Disney Company (NYSE:DIS) and PepsiCo (NASDAQ:PEP) have confirmed their plans to increase prices, with PepsiCo's finance chief Hugh Johnston confirming this decision. Chipotle (NYSE:CMG) also intends to implement a modest price increase, according to Laurie Schalow, the company's chief corporate affairs officer. Despite higher prices, Carnival (NYSE:CCL) cruise line reports robust booking volumes.
The Fed prefers using the Personal Consumption Expenditures index for measuring inflation, a point emphasized by Michael Feroli, Chief U.S. economist at J.P. Morgan. This potential slowdown in inflation would be a welcome development for Federal Reserve policymakers who have been grappling with high inflation rates for over a year.
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