Inflation Outpaces Wages for a Sixth Straight Month

Inflation outpaced wage growth for the sixth straight month in September, according to the Labor Department's latest consumer price index report, according to Morning Brew. Overall prices rose 3.7% from a year earlier, above economists' expectations, while core inflation — which excludes food and energy — climbed 2.6% annually.

Gasoline prices jumped 9.1% between August and September and were up 34% over the past year, while heating oil costs rose 74% compared with a year ago, driven in part by the war in Iran. Transportation costs rose 0.6% and food prices held flat, though analysts expect retailers to pass on higher shipping costs — PepsiCo said last week it plans to raise prices on its snacks and sodas.

Computer, peripheral and smart home assistant prices rose 9.7% from a year earlier as chip and semiconductor costs climbed amid the AI data center buildout. A Goldman Sachs report this week estimated that buildout is adding nearly half a percentage point to the annual inflation rate.

The odds that the Federal Reserve raises interest rates a quarter point at its October 27-28 meeting rose from 22% to 35% after the inflation data was released, according to FedWatch. The report also lands three weeks before the November 3 midterm elections, where affordability is seen as a major factor for voters.