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The latest uptick in US inflation is not as bad as it looks

US consumer prices rose more than expected in September—again. The consumer price index (CPI) rose by 0.4% from August, beating the 0.3% increase that economists had predicted. It’s part of a 5.4% increase over the past 12 months.Rising prices over the summer fueled concerns that inflation could spiral out of control, with some arguing that increases…

US consumer prices rose more than expected in September—again. The consumer price index (CPI) rose by 0.4% from August, beating the 0.3% increase that economists had predicted. It’s part of a 5.4% increase over the past 12 months.

Rising prices over the summer fueled concerns that inflation could spiral out of control, with some arguing that increases in one industry could trigger higher prices in others. But other inflation observers, including the US Federal Reserve, say prices will come back down as the pandemic subsides, even though they admit that hasn’t happened as fast as they expected.

The September data do not settle this debate, but they show there is no reason to panic yet. The items whose prices sparked inflation worries over the summer were considerably cheaper in September. And what is fueling inflation now are mostly goods and services that are normally pretty volatile.

Food and energy bounce around

September prices were pushed up by more expensive food, energy, and rent. Food and energy are notoriously volatile, which is why economists look at core inflation, which strips them out. That measure increased by 0.2%, higher than August’s core increase of 0.1%, but still pretty low.

The rise in rents—they were up by 0.5% in September, compared to a 0.3% uptick the month before—is potentially more worrisome. Increases in housing prices are stickier, and because the category accounts for up to 40% of the weighted basket of prices that make up core inflation, it has an outsized effect on the overall figure.

Still, September’s higher rents might just be a reflection of landlords finally being able to up prices after months of pandemic-related disruptions. “While you might see listed rents or new house prices move up or down a bunch, most of us don’t change ho

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