The numbers: The higher cost of renting and owning a home nudged consumer prices higher in September, but inflation more broadly eased again after a recent runup.
The consumer price index rose 0.1% in September to mark the sixth increase in a row, the government said Thursday. Economists polled by MarketWatch had predicted a 0.2% advance.
Yet the increase in the cost of living over the past 12 months slowed again to 2.3% from 2.7%, the government said Thursday. Two months ago, the yearly rate hit a six-year high of 2.9%.
A more closely followed measure that strips out food and energy also rose 0.1% last month. It’s known as the core rate of inflation.
The yearly increase in the core rate was flat at 2.2%.
Separately, the government said Social Security benefits will rise 2.8% in 2019 based on inflation figures derived from the latest CPI report.
What happened: About half of the increase in the consumer price index last month was tied to higher rents and the cost of home ownership.
The cost of clothing increased for the first time in fourth months and medical costs rose for the first time in three months. Prices for airline tickets and auto insurance also went up.
Although gasoline prices actually rose last month, they did not increase as much as they normally do in September. As such the seasonal adjustments resulted in gas prices showing a decline.
Food prices were unchanged. The cost of used vehicles fell sharply.
There was some good news for workers. After adjusting for inflation, hourly wages rose a solid 0.3% in September. They are up 0.5% in the past year.
Read: Wholesale inflation is back again, but PPI shows it’s not rising as rapidly
Big picture: The good news is the U.S. economy is arguably the strongest it’s been in two decades, with job openings at a record high and unemployment at a 48-year low.
The bad news? Strong growth and a tight jobs market has produced higher inflation, forcing the Federal Reserve to raise interest rates.
The plunge in the stock market on Wednesday reflects worries about higher interest rates. The economy also typically slows.
Those days are still far off, though. Rates are still quite low by any historical measure, inflation is still relatively benign and the economy has plenty of vigor to keep growing solidly at least through the end of the year.
Read: Nobel winners explain how new ideas fuel the economy, help poor nations and shield the environment
What they are saying? “Inflation this year is shaping up weaker than expected despite Fed assurances … that inflation will rise above 2% in the next couple of years,” said chief economist Chris Low of FTN Financial.
Market reaction: The Dow Jones Industrial Average DJIA, -0.88% and S&P 500 SPX, -0.94% fell again in Thursday trades after a bruising session the previous day. The Dow sank 831 points and has been in full retreat after setting a record high late last week.
The 10-year Treasury yield TMUBMUSD10Y, -0.09% fell slightly to 3.17%, but it remains near a seven-year peak. Higher inflation and pending Fed rate hikes have pushed yields higher and driven stock prices lower.