Higher gasoline prices are expected to push up overall U.S. inflation in September as households and businesses absorb energy costs. Banks, meanwhile, are preparing to report strong profits. Oil prices have climbed above $100 per barrel after renewed violence in the Iranian conflict, and average gasoline prices remain well above $4 per gallon. Diesel prices sit just below the records reached in September.
The consumer price index is expected to rise 0.6% month over month, according to the median projection in a Bloomberg survey of economists. That would mark the biggest increase in five months, following a 0.4% rise a month earlier. The Bureau of Labor Statistics is scheduled to release the figures Wednesday. The projection backs expectations that the Federal Reserve won't raise interest rates this month.
Energy costs reach household budgets
The U.S. war with Iran is now entering its eighth month. Energy costs have put added pressure on household budgets and businesses, while renewed fighting in the Middle East pushed gas prices higher in August. The source article says the sides in the Iranian conflict aren't willing to concede ground and anticipates similar inflation pressure in September.
The article gives another September CPI expectation, too: the Labor Department is expected to report Wednesday that the index rose 0.2% month over month and 3.6% from a year earlier. Those figures don't match the Bloomberg survey’s 0.6% monthly projection. The article doesn't explain the gap between the estimates.
On Thursday, the Labor Department is due to release the producer price index, a measure of inflation before it reaches consumers. Economists expect the index to rise from 5.4% in August; it stood at 4.8% in July. PepsiCo said last week it was raising prices on Doritos and other products, citing higher fuel, aluminum and commodity costs.
Housing and spending under pressure
The National Association of Realtors plans to report September existing-home sales on Tuesday. Economists believe sales held steady from August, when they fell to their slowest annual pace in more than a year. Rising mortgage rates have thwarted prospective buyers. Freddie Mac reported Thursday that the average long-term U.S. home-loan rate had risen for a seventh straight week and stood higher than at any point in nearly three years.
Housing has been in a slump since 2022. Sales of previously occupied homes were essentially flat last year, at a 30-year low. Those figures put housing costs and access to home ownership among the pressures facing households as September inflation reports approach.
Economists expect Americans to have cut back on shopping in September, with the holiday season approaching. Most forecast retail sales will increase 0.65%. Consumers spent strongly in August despite complaints about higher prices at gas stations and grocery stores. Retail sales rose 1.2%, nearly twice the forecast increase. The National Retail Federation will release its holiday forecast next week.
Banks report gains as borrowing costs remain high
Banks have posted record profits this year. The article links those results to volatile stock markets, which boosted trading activity, commissions and fee revenue, as well as continued consumer spending that supported fee and lending revenue. Analysts expect JPMorgan Chase to report a 47% increase in profits and Citigroup a 61% increase when both release third-quarter earnings Tuesday. Bank of America is expected to report a 36% profit gain Wednesday. Morgan Stanley and several other banks and financial institutions are also set to report during the week.
High interest rates weigh on households and businesses, but they let banks charge more for loans. The Federal Reserve recently raised its benchmark interest rate to cool inflation and is leaning toward another hike by the end of the year. Inflation reports, retail sales data and bank results are expected to draw attention as inflation becomes a focus of U.S. midterm elections less than a month away.