US inflation and Federal reserve sentiment

• The US consumer price index (CPI) continued to decelerate in September. The government reported that, in September, the CPI was up 2.4% from a year earlier, the lowest rate of inflation since February 2021. Prices were up 0.2% from the previous month. The deceleration was largely prompted by a sharp drop in energy prices and very slow growth of food prices. When energy and food are excluded, core prices were up 3.3% from a year earlier. This was higher than the 3.2% core inflation reported for August. It was the first time since March 2023 that core inflation had risen from the previous month. Still, the September rate of core inflation was the second lowest since April 2021. Meanwhile, core prices were up 0.3% from the previous month.
• The details are of interest. In September, prices of durable goods were down 2.9% from a year earlier while prices of non-durable goods were down 0.7%. On the other hand, prices of services were up 4.7%. The latter included a 4.9% increase in the price of shelter. In fact, when shelter is excluded, the overall CPI was up only 1.1% from a year earlier. Thus, the housing market is one of the biggest contributors to remaining inflation. In recent months, the shelter component of the CPI has decelerated modestly.