All eyes are on inflation, and the September Consumer Price Index (CPI) indicates it isn’t receding as Fed officials had expected. Last month’s headline CPI advance increased from +0.3% to +0.4% as the cost of food, energy, new vehicles and housing moved significantly higher. On a year-over-year basis, CPI is now rising at a hot +5.4% pace, matching a 13-year high and nearly triple the +1.8% average during the 10-year period before the pandemic. Core CPI, which excludes the volatile food and energy components, rose +0.2% in September and remains at a +4.0% annual pace, double the Fed’s target.

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