Key inflation measure climbs to 40-year high as Fed efforts ring futile and shoppers brace for more pain

The Federal Reserve is racing to keep inflation under control.

The Bureau of Labor Statistics said that the core Consumer Price Index rose 6.6% in the year through September. A median forecast was held by economists. The print marked the fastest price growth since 1981 and a hefty increase from the previous month, raising fresh concerns that the battle against inflation is worsening.

The government's related index was up 0.7% through the month. Core inflation and housing count for more than one-third of the average household's expenditures. Housing costs have taken over from gas and food inflation.

The largest one-month increase across coreCPI components was seen in transportation services. The medical services jumped 1%.

According to the report, the headline measure of the consumer price index rose 8.2% in the year through September. Through the month of September, the headline measure rose 0.4%, beating the average estimate of a small increase. Compared to a year ago, month-over-month price growth is seen as a more relevant inflation gauge. The last month's gain is larger than the one that preceded it and hints at new factors driving Americans' cost of living even higher.

Since food and energy costs can vary from month to month, the core index is seen as a better indicator of underlying inflation pressures. The Fed's rate hikes aren't weighing on overall price growth, and that it's more than gas and food prices that are keeping inflation high.

There was a mixed bag for economists. Households could soon hope for some relief from the price increases experienced over the past year after the slight drop in headline inflation.

It will be difficult for the US to put price growth behind it. The Fed has moved monetary policy into a place where it will hit the brakes on economic growth by raising interest rates. Officials have repeatedly signaled they will continue to hike rates into the future and that such moves will cause economic pain in the form of weaker growth and higher unemployment.

Chair Powell said in September that it was unlikely the central bank would be able to bring inflation down.

If we want to light the way to a strong labor market, we have to get inflation under control. I would like to be able to do that painlessly. He said there wasn't.

The hiking cycle will continue into next year, according to the jobs data out last week. The US added 263,000 jobs in the month of September, beating expectations and the pre-pandemic pace. The five-decade low in the unemployment rate was matched by the 3.5% figure. The labor market is still very strong.

If the September jobs report opened the door to more larger-than- usual rate hikes, the latestCPI print blew it off its hinges. The Fed's fight against inflation is more serious than ever as prices are still rising.