The latest inflation report just came in slightly above Wall Street’s consensus forecast, stoking debate among experts about the potential for more persistent consumer price increases than expected. As measured by the consumer price index, inflation rose 0.4% in September and 3.7% from a year ago, the Bureau of Labor Statistics reported Thursday. That’s compared with a consensus Street estimate for an increase of 0.3% and 3.6%, respectively.
Over the past 18 months, as the Federal Reserve battled inflation with interest rate hikes, economists have routinely warned that one of the key threats to the U.S. is “sticky” price increases. Inflation acts like a weight on the back of consumers and businesses; and when it persists for too long (or “sticks”), it can force Fed officials to raise interest rates to a point where a job-killing recession becomes unavoidable. Citi’s chief U.S. economist Andrew Hollenhorst, who believes a recession will hit the U.S. in the first half of 2024, explained in a Thursday note that he fears September’s inflation report was evidence of this type of sticky inflation.
