Latest CPI Proves Inflation Fight Must March On

The annual inflation rate fell to 3% in June but has been rising ever since.

The September consumer price index (CPI) number indicated that the annual inflation rate was 3.7%. This is the same annual inflation rate posted in August. At its September Open Market Committee meeting, the Fed decided to pause the interest rate hikes that started more than a year ago. The Fed, which has a two-year track record of bad decisions, made another yet bad decision.

Recall in 2021 when inflation first escalated, the Fed kept interest rates near zero and kept vastly expanding the money supply through its bond-buying program. That allowed annual inflation to rise, so by mid-2022, the inflation hit 9.1%. Finally, in June 2022 the Fed began to act aggressively.

Fed officials pushed the Federal Funds Rate from near zero to nearly 5.5% by early 2023. Then they slowed and eventually eliminated rate increases.

The Fed wanted to take enough excess demand out of the economy to reduce inflation to the 2% range without bringing about a recession. Today, Fed officials say, their strategy is working. Annual inflation fell from its 9.1% high to 3% by June 2023. But is the current strategy working?

In July, the annual inflation rate increased to 3.2%, then 3.7% in August and again 3.7% in…