Inflation Moderates in September, Though Used Car Prices Jump Again
Kiplinger’s latest forecast on inflation
Inflation moderated in September to 0.2%, despite used-car prices jumping 6.7%, their second strong monthly pickup. Prices of services were flat. Shelter rent is rising at only a 2.1% rate, after coming in above 3% for each of the past five years. Excluding the used-car price jump, total inflation would have been flat for the month. The reason for the strength in used-car prices is that they have been in demand because of shortages of new cars resulting from production cuts earlier in the year.
Food prices were stable, on average, in September. Meat prices and egg prices continued to decline, as each come down from price peaks during the earlier coronavirus-related surge.
The price of medical services paused again. Although hospital charges are still rising at a brisk clip, health insurance costs dipped in September. The cost of shelter is running lower than normal right now because rent increases have been slowed by the pandemic. But shelter costs may rise a bit faster next year as rents pick up.
The overall inflation rate will stay moderate, ending the year at 1.2%, far below last year’s 2.3%. Core inflation, which excludes the costs of food and energy, will continue to run higher than the headline rate, at about 2% over the course of this year.
A note about data reliability: An issue that government data collectors face is that at the moment, they cannot go into stores that are shut down and collect price data. Therefore, the reliability of some of the numbers may be suspect, though the Bureau of Labor Statistics managed to obtain three-fourths of their normal price quotes online and through other means. The BLS also has statistical procedures in place to keep missing data from biasing the overall numbers.
- 1Kiplinger’s Economic OutlooksRegularly updated insights on the economy’s next moves.
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- 9RETAIL SALES: In-store holiday sales up 5%, e-commerce up 29%Kiplinger’s latest forecast on retail sales and consumer spending.
- 10TRADE DEFICIT: Widening 4% in ’20Kiplinger's latest forecast on the direction of the trade deficit.