Consumer prices jumped more than expected last month, with food, rent and furniture costs surging as a limited supply of housing and a shortage of goods tied to supply chain troubles combined to fuel rapid inflation.

The Consumer Price Index climbed 5.4% in September when compared with the prior year, more than expected in a Bloomberg survey of economists and faster than its 5.3% increase through August. The data raise the stakes for both the Federal Reserve and the White House, which are now facing a much longer period of rapid inflation than they had expected.

From August to September, the index rose 0.4%, also above expectations. Monthly price gains have slowed from their breakneck pace earlier this year — they popped as much as 0.9% this summer — but they remain abnormally rapid. And price pressures have not been fading as quickly as policymakers had hoped.

The September gains came as food — especially meat and eggs — cost consumers more. Housing prices also accelerated, something that raised alarm bells among many economists. Shelter is an important part of overall inflation, and upward pressure in that index tends to last for some time.

In recognition of how persistent the price increases are proving, the Social Security Administration said Wednesday that benefits will increase 5.9% in 2022, the biggest boost in 40 years. The increase, known as a cost of living adjustment, is tied to rising inflation.

The reality that American households are paying more for dinner, fuel and housing is a major political problem for the Biden administration and an economic dilemma for the Fed. Voters could punish Democrats at the polls as wage gains, while decent, fail to fully cover higher costs. And as prices move up in key areas like rent, chances are rising that fast price gains could last for some time.


“You have the sticky, important and cyclical piece of inflation surprising to the upside,” said Laura Rosner-Warburton, an economist at MacroPolicy Perspectives. “It is certainly a very significant development.”

Inflation jumped early in 2021 as prices for airfares, restaurant meals and apparel recovered after slumping when the economy locked down during the depths of the pandemic. That was expected. But more recently, prices have continued to climb, as supply shortages mean businesses cannot keep up with fast-rising demand. Factory shutdowns, clogged shipping routes and labor shortages at ports and along trucking lines have combined to make goods difficult to produce and transport.

The snarls show no obvious signs of easing, and although Fed officials still think inflation will fade, they are increasingly concerned that supply disruptions could last long enough to prompt consumers and businesses to expect higher prices. If people believe that their lifestyles will cost more, they may demand higher compensation — and as employers lift pay, they may charge more for their goods to cover the costs, setting off an upward spiral.

Wages are already heading up, though typically too little to fully offset the amount of inflation that has occurred this year. There are notable exceptions to that, including in leisure and hospitality jobs, where pay has accelerated faster than prices.

The Fed aims for 2% inflation on average over time, which it defines using a different but related index, the Personal Consumption Expenditures measure. That gauge is released at more of a delay and has also jumped this year.

Central bankers have said that they are willing to look past surging prices because the gains are expected to prove transitory, and they expect long-run trends that had kept inflation low for years to come to dominate over time. But they have acknowledged that rapid price gains have lasted longer than they had expected and have expressed wariness.


“I believe, as do most of my colleagues, that the risks to inflation are to the upside, and I continue to be attuned and attentive to underlying inflation trends,” Richard Clarida, the central bank’s vice chair, said in a speech Tuesday.

Fed officials are already planning to soon dial back their $120 billion in monthly asset purchases, a process often called tapering and the first step away from crisis-era policy. The Fed’s more traditional tool, the federal funds rate, remains set to nearly zero and is expected to stay there for some time.

The fact that the Fed is poised to begin tapering could mean that it will be more nimble if it does have to raise rates to control inflation next year.

Central bankers have signaled that they would use the Fed’s policies to control inflation if it proves persistent — but they would prefer to leave borrowing costs at low levels until the job market is more fully healed. Those potentially conflicting goals could set the stage for a tense 2022.

Some officials may begin to push to raise rates earlier thanks to the price pop.

“We’re already seeing officials beginning to stake out arguments on liftoff,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank. “It’s mostly an inflation story and an inflation expectations story.”


Wall Street is watching every fresh inflation data point closely because higher rates from the Fed could dent growth and stock prices. Plus, climbing costs can cut into corporate profits, denting earning prospects.

White House officials and many Wall Street data watchers tend to emphasize a “core” index of inflation, which strips out volatile food and fuel prices. Core inflation climbed at 4% in the year through last month, but the monthly gain did look less pronounced, at 0.2%.

Some economists welcomed that moderation as good news, along with the cooling in key prices, like airfares, that had popped earlier in the economic reopening. Others emphasized that once supply chain kinks were worked out, prices could drop on products like couches, bikes and refrigerators, providing a counterweight to rising housing expenses.

“I don’t think there’s any reason to panic,” said Omair Sharif, founder of Inflation Insights.

Sharif said he expected consumer price inflation to moderate, coming in at 2.75% to 3% on a headline basis by next July, and for core inflation to cool down even more. Given that, he thinks policymakers at the Fed have room to be patient.

“They can wait this out for longer,” he said.