Inflation Is Cooling — Not That NJ Consumers Have Noticed | Across New Jersey, NJ Patch

NEW JERSEY — Consumers in New Jersey are still struggling with inflation, according to a new analysis released Thursday, the same day a government inflation report pointed to more signs of recovery from a 40-year high in inflation.

The Labor Department said in its September inflation report, released Thursday, that inflation nationwide dropped to its lowest point since it began surging three years ago. Consumer prices increased just 2.4 percent in September for a year earlier and were down from 2.5 percent since August. It was the smallest annual increase since February 2021.

A report from WalletHub, a consumer finance company, said the New York and Philadelphia metros are among 23 nationwide where inflation continues to outpace other parts of the country. To determine how inflation is affecting people in different parts of the country, the company compared 23 major Metropolitan Statistical Areas against Consumer Price Index inflation data for September versus July and the year prior. In some MSAs with a one-month lag in reporting, data for August and July 2024 and July 202 was used for comparison.

The New York-Newark-Jersey City metro ranks 3rd among the 23 evaluated for the WalletHub study. Inflation is up 0.7 percent from two months ago and 3.8 percent from a year ago.

And, the Philadelphia-Camden-Wilmington MSA ranks 6th among the 23 evaluated for the WalletHub study. Inflation is up 0.6 percent from two months ago and 3.4 percent from a year ago.

People living in Honolulu, Chicago, New York City, Detroit and Boston are facing the most inflationary pressure. Inflation still increased in the cities at the bottom of the ranking, but by a much lower margin. Those cities are Tampa, Florida; Riverside, California and Denver (tie); Anchorage; and Houston.

The Labor Department said that excluding volatile food and energy costs, “core” prices, a gauge of underlying inflation, remained elevated in September, driven up by rising costs for medical care, clothing, auto insurance and airline fares. Core prices in September were up 3.3 percent from a year earlier and 0.3 percent from August. Economists closely watch core prices, which typically provide a better hint of future inflation.

Some items that contributed to higher core inflation last month, notably used cars, may rise again in the coming months, keeping prices a bit elevated, Alan Detmeister, an economist at UBS Investment Bank, told The Associated Press.

Other items that rose in price in September, like clothing and air fares, are more volatile and should cool soon.

“Things are still gradually coming down, but there is going to be volatility month to month,” said Detmeister, a former Federal Reserve economist.

Taken as a whole, the September figures show that inflation is steadily easing back to the Fed's 2 percent target, even if in an uneven pattern. That decline suggests that the Fed will likely keep cutting its benchmark interest rate this year, with two quarter-point reductions in November and December expected by most economists.

On a positive note, apartment rental prices grew more slowly last month, a sign that housing inflation is finally cooling, a long-awaited development that would provide relief to many consumers.

“I think we're on the right path here,” Omair Sharif, founder of Inflation Insights, told The AP. “We should see rent cool off quite a bit.”

Overall inflation last month was held down by a big drop in gas prices, which fell 4.1 percent from August to September. Grocery prices jumped 0.4 percent last month, after roughly a year of mild increases, though they're just 1.3 percent higher than a year earlier. Restaurant food prices increased 0.3 percent last month and are up 3.9 percent in the past year.

Food overall is costing Americans about 25 percent more than before the pandemic.

The new inflation report also shows clothing prices rose 1.1 percent from August to September and are up 1.8 percent from a year ago.

The Associated Press contributed reporting.

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