Inflation in the United States saw a minimal increase in September, with the Consumer Price Index (CPI) rising by 0.2%. This increase was consistent with the previous months of August and July, as reported by the Bureau of Labor Statistics. The overall 12-month increase in the index was 2.4%, which is the lowest yearly increase since February 2021. The rise in food and shelter costs contributed to 75% of the total increase in September, with the shelter index increasing by 0.2% and the food index by 0.4%.
However, not all sectors saw an increase in prices. The recreation and communications indexes both decreased in September, balancing out some of the increases. Energy costs also fell significantly, with the energy index declining by 1.9% over the month.
Despite the rise in inflation, the Federal Reserve may consider cutting interest rates soon. The Fed aims for 2% inflation before making significant rate cuts, and the recent small increase in the CPI may signal a rate cut in the near future. Experts predict that the Fed is likely to cut rates after a half percentage point reduction in September, which was the first rate cut in four years.
Mortgage rates initially dropped after the rate cut in September, reaching a two-year low of 6.08%. However, rates have begun to rise again, with the average 30-year mortgage rate at 6.12% as of October 3rd. Despite the fluctuation in rates, pending home sales have risen by 2% year over year at the beginning of October.
While experts do not foresee rates falling much further, potential rate cuts at the end of the year could change the outlook. Major lenders predict rates to hover between 6.2% to 6.4%, with rates not likely to drop below 6%. If you are interested in consolidating or refinancing debt, it may be helpful to consult experienced loan officers for guidance.