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Bucking all forecasts and challenging expert predictions, the U.S. witnessed an alarming inflation rise in September. This unexpected surge not only raises eyebrows but also intensifies the possibility of the Federal Reserve’s intervention via interest rate adjustments. With this latest revelation, it’s becoming glaringly apparent that the U.S. economy is poised on the brink of significant changes. Defying Predictions: Numbers Don’t Lie The Bureau of Labor Statistics recently reported that the year-on-year consumer price index has surged to 3.7%. Astonishingly, this is the same as the previous month, even when most economists had foreseen a dip. On the bright side, if we can call it that, month-to-month inflation did slow down a tad, dropping from 0.6% to 0.4%. Energy prices, typically a significant contributor to inflation rates, offered some relief this time. However, before anyone breathes easy, the “core” inflation, which excludes the often unpredictable energy and food prices, stubbornly held its ground at a 0.3% monthly increase. When viewed annually, it did slide, but only marginally, from 4.3% to 4.1%. Alisher Khussainov from Citadel Securities did not mince words, calling this revelation “a warning signal for the Fed.” Across various sectors – be it growth, payrolls, or inflation – the trend is unmistakably hinting at a re-accelerating economy. Not a recession, as some doomsayers predicted, but a veritable resurgence. The central bank better brace itself for this reality. Digging Deeper: The Real Concerns Despite the headline inflation rate’s recent uptick, many market players chose to dismiss it, primarily because volatile energy prices significantly influenced it. But the latest figures have caught everyone off guard, revealing an unexpected inflation spike in core sectors, with housing costs, in particular, leading the charge, increasing by 0.6% within a month. MUFG’s U.S. economist, Agron Nicaj, sounded an alarm about this “shelter component.” One…

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Filed under: News - @ October 14, 2023 1:16 am