Inflation rose 3 percent in September : NPR

A man purchases produce at a supermarket in Monterey Park, California.

FREDERIC J. BROWN/AFP via Getty Images/AFP

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FREDERIC J. BROWN/AFP via Getty Images/AFP

Annual inflation rose less than expected in September, according to a crucial report released Friday, nine days later than normal due to the government shutdown.

Consumer prices rose 3.0% in September from a year ago, slightly below forecasters’ expectations, according to the U.S. Bureau of Labor Statistics (BLS). Month over month, prices rose 0.3%, a slight slowdown from the 0.4% inflation recorded in August.

Overall, the inflation data will likely fuel expectations that the Federal Reserve will cut interest rates by another quarter point at its policy meeting next week – its second straight reduction.

Wells Fargo economist Nicole Cervi is among those expecting a reduction — despite the latest evidence that prices continue to rise faster than the Fed’s 2% target.

“Even though the monthly inflation data is weaker than expected,” the underlying trend is that “inflation remains persistent,” she says.

The Fed is missing many other key economic data since most BLS workers were put out of work earlier this month when the shutdown began. Most government economic reports have been suspended until funding is restored.

But a select group of BLS analysts were called back specifically to release the September inflation report, which was originally scheduled to be released on October 15. That’s because it is a key part of the formula used to calculate the cost of living adjustment (COLA) that 75 million Social Security beneficiaries will receive next year.

The Social Security Administration (SSA) said Friday that payments to beneficiaries will increase 2.8 percent next year, an increase of about $56 per month starting in January.

The COLA increase for next year is higher than the 2.5% increase Social Security beneficiaries received this year, but it is lower than the 3.1% average over the past decade, according to the SSA.

“It’s better than nothing … but there are so many other things to fix,” says Jim Pedersen, a 66-year-old retired autoworker who is also president of the Michigan Alliance for Retired Americans, a nonprofit founded by the AFL-CIO.

He points out that older people tend to spend more money on health insurance and medications than younger Americans — and that health care prices outpace inflation. Medicare premiums are expected to rise more than 11% next year, according to AARP.

“They will therefore exceed this 2.8% very quickly,” he says.

The raw material for the inflation report – price controls on hundreds of goods and services across the country – was collected in September. Tariffs continue to put upward pressure on the price of imported goods, while other components of inflation, such as housing costs, have eased somewhat.