US inflation remains elevated in September amid supply chain disruptions

WASHINGTON - US inflation remained elevated in September as supply chain disruptions have persisted for months, the Labor Department reported on Wednesday.

The consumer price index (CPI) increased 0.4 percent in September after rising 0.3 percent in August. Over the past 12 months through September, the index increased 5.4 percent, slightly up from the 5.3 percent pace for the 12-month period ending August, the department said.

Excluding the volatile food and energy components, the so-called core CPI rose 0.2 percent in September after increasing 0.1 percent in August. Over the past 12 months through September, the core CPI rose 4 percent, the same increase as the period ending August, according to the department.

"Overall, we expect to see the run of strong inflation readings continue in the coming months. Oil and natural gas prices have climbed further in recent weeks," Sarah House, senior economist at Wells Fargo Securities, said Wednesday in a note.

"More broadly, the logjams across supply chains show no signs of easing yet. Until inventories are rebuilt, goods prices are unlikely to revert to the deflationary trend that pervaded for the better part of the past two decades," House said, expecting CPI inflation to remain above 5 percent on a year-ago basis through the first quarter of next year.

Joseph Brusuelas, chief economist at accounting and consulting firm RSM US LLP, noted that sectors that are sensitive to these supply disruptions, including energy, food, shelter and new vehicles, were the main drivers of the price increases last month.

"The policy takeaway from this data is that the Fed is moving toward changing the language it uses to describe inflation. The Fed will almost certainly use public pressure, known as open-mouth operations, to target inflation expectations as it drops the use of the word transitory from its lexicon," Brusuelas said.