Here is the inflation breakdown for September 2024 – in one graph

According to the U.S. Bureau of Labor Statistics, inflation fell in September as lower gasoline prices combined with other easing price pressures in areas such as the housing market to ease consumer wallets.

The consumer price indexA main inflation gaugewas up 2.4% last month from September 2023, the agency said.

That figure is down from 2.5% in August, meaning price growth slowed. It is also the smallest annual reading since February 2021.

However, September’s CPI figure was slightly higher than economists had predicted.

There were some sticking points, such as an increase in categories such as clothing, car insurance and groceries. However, most appear to be “one-off” increases, said Mark Zandi, chief economist at Moody’s.

“The inflation trend remains very positive,” Zandi said. “This month has been a bit of a slump and I don’t think it will continue.”

The CPI measures how quickly prices rise or fall for a wide range of goods and services, from car repairs to peanut butter and living room furniture.

Inflation has retreated significantly from the pandemic-era peak of 9.1% in June 2022 and is moving toward policymakers’ long-term annual target of nearly 2%.

“We have made significant improvements over the past two years,” said Sarah House, senior economist at Wells Fargo Economics.

That said, the slowdown in the labor market has worried economists more than inflation in recent months.

The US Federal Reserve, which had raised interest rates sharply from early 2022 to combat high inflation, started cutting them in September to ease pressure on the labor market and the economy.

Food inflation has also been “fairly subdued” over the past year, House said.

According to the CPI, food prices have increased by 1.3% since September 2023.

Prices for agricultural commodities — a “key input cost” for food — have fallen or appear “more stable,” House said. Examples of agricultural commodities are corn, wheat, coffee and soybeans.

Wage growth has slowed, causing labor costs for things like transporting or preparing food to fall, House said. And supermarkets have offered more price incentives and promotions as consumers become more concerned about their spending, she said.

That said, inflation in the food sector did see a big jump month-on-month from August to September, from 0% to 0.4%.

“I don’t think this will hold up in the future,” Zandi said.

Individual foods have their own unique supply and demand dynamics that can affect price.

For example, egg prices have risen more than 8% from August to September and 40% since September 2023, largely due to a new outbreak of bird flu, a contagious and fatal disease that affects chickens and other birds, economists said.

Housing construction accounts for the largest share of the CPI – and has been the biggest stumbling block to getting inflation back to target levels, according to economists.

“It’s a huge component,” House said. “What happens there could really change the dial when it comes to headline inflation and core inflation.”

CPI inflation – which includes rents and an equivalent measure for homeowners – has fallen gradually, but remains stubbornly high. That has puzzled many economists, as real estate data shows that growth in average rents for new renters has been subdued for about two years.

In September, monthly inflation fell back to 0.2%, compared to 0.5% in August.

That’s one of the most encouraging signs from the latest CPI report, economists said.

“Shelter inflation is definitely moderating now,” Zandi said. “And that is such an important part of the CPI.”

Housing falls into the ‘services’ category of the economy.

Inflation for goods has largely retreated from the nosebleeds of the pandemic era as out-of-control supply-demand dynamics calm down, economists said.

But services inflation “has still been coming down quite slowly,” House said.

This is largely due to shelter. But other categories also remain high.

Many services are “heavily dependent” on prices in other parts of the economy, House said. For example, insurers are now increasing car insurance premiums, following an earlier increase in the prices of new and used cars.

According to the CPI, motor vehicle insurance prices have increased by 1.2% from August to September and by around 16% since September 2023.

It typically takes a while for such dynamics on paper to trickle down to the services side, she said.

“Services inflation peaked more slowly on the way up and will likely decline more slowly on the way down,” she said.