A key indicator of US inflation remained at a high 6.2% in September

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WASHINGTON (AP) — A measure of inflation that is closely watched by the Federal Reserve remained painfully high last month, the latest sign that the prices of most goods and services in the United States continue to rise steadily.

Friday’s report from the Commerce Department showed prices rose 6.2% in September from 12 months earlier, the same year-over-year rate as in August.

Excluding volatile food and energy costs, so-called core prices rose 5.1% last month from a year earlier. It’s also faster than the 4.9% annual increase in August, although below the four-decade high of 5.4% reached in February.

The report also showed consumers spent more last month, even after adjusting for inflation, a sign of Americans’ willingness to keep spending in the face of high prices. Consumer spending rose 0.6% from August to September, or 0.3% including price increases.

The latest numbers come just as Americans have started voting in midterm elections in which Democrats’ control of Congress is at stake and inflation has risen to the top of voters’ concerns. Republicans have blamed President Joe Biden and congressional Democrats for the price spike that has rocked households across the country.

Midterm elections are less than two weeks away. (Source: CNN/KSNV)

Persistently high inflation, near its worst in four decades, has intensified pressure on the Federal Reserve to continue to aggressively raise its short-term policy interest rate in an attempt to rein in rising inflation. price. Last month, the Fed raised its policy rate by a substantial three-quarters of a point for the third consecutive timeand next week he is expected to do so for the fourth time.

The central bank’s latest rate hikes far exceed the quarter-point increases it has typically used in the past when seeking to tighten credit to fight inflation. But after being caught off guard at the end of last year, when prices accelerated far more than Fed policymakers expected, officials raised their benchmark rate at the fastest pace in four decades. In doing so, they increase the risk of a recession – something many economists expect to happen sometime next year.

The Fed hikes have resulted in much higher lending rates for businesses and consumers, especially for mortgages. The average 30-year fixed mortgage rate exceeded 7% this weekaccording to Freddie Mac, the highest level in two decades and more than double what it was a year ago.

Rapidly rising borrowing costs crushed the housing market. Existing home sales have fallen for eight consecutive months and have fallen nearly 25% over the past year. Sales and construction of new homes are also down.

A weaker housing market slowed the economy as lower home purchases also led to lower sales of furniture, appliances and home improvement equipment.

Home prices, which have skyrocketed during the pandemic, have started to decline as a result. The S&P Case-Shiller home price index fell from July to August for a second consecutive month, according to the latest available data,

But those declines have yet to show up in government measures of housing costs, which include rents, which continue to rise for many people as they renew their leases. It could take until late spring or summer before falling house prices trickle down to government inflation indices. This delay could prevent official measures of inflation from falling much over the next few months.

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