MACRO: US Inflation rate back to 13-year high

• US CPI rose 5.4% YoY, matching the largest annual gain since 2008 
• Core inflation unchanged at 4%

US inflation accelerated in September, with consumer price pressures across America showing no sign of easing ahead of the upcoming holiday shopping season.

The annual inflation rate in the US edged up to  5.4% in September from 5.3% in August and above analysts’ estimates of 5.3%.  It's the fastest rate of inflation in 13 years, matching the pace set in July. Core inflation — which strips out volatile food and energy costs — grew 4.0%, the same spike as in August.

The pickup in price growth seen last month reflected higher food and shelter costs. On the other hand, prices eased for used cars and trucks, apparel and airfares. Surprisingly wages rose 0.8% in the month in a sharp acceleration from the 0.3% climb a month earlier. Wage growth is the real crux of inflation and that's something that was also evident in the last NFP report.

Headline inflation in the US rose at a faster-than-expected pace last month, pushed higher by climbing food and energy prices. Source: Bloomberg via ZeroHedge

Today's data cast doubts on the Fed view that high inflation is transitory and may reinforce the central bank's inclination to soon start tapering process, especially as the supply-chain issues, which negatively affect many businesses across the country, show little signs of abating. Also many economists believe that consumer prices are poised to rise further in the months ahead amid a surge in the costs of energy products.

Minutes from last month’s Federal Open Market Committee meeting which will be published today at 7:00 PM BST and may provide additional hints on central banks views toward progress on employment and inflation goals for tapering.