US Inflation tops 5% in September, markets unfazed

US Inflation tops 5% in September, markets unfazed

Inflation in the US has continued to rise since May this year, reaching 5.4% in September (year on year), data out today confirmed. This marginally exceeded economists' expectations of a 5.3% annual figure. As market expectations that the US Federal Reserve will begin tapering its asset purchase program have increased in recent months, markets were unfazed by the data which will be seen as confirmation of this trajectory. Inflation seems to be becoming 'stickier' as price increases become broader based, affecting a raft of things such as rents, cars, everyday goods and energy. The higher inflation numbers will also add weight to the idea of interest rate hikes in the short to medium term, which the US central bank has already begun signalling in its guidance. Despite the data release, US markets for equities and bonds both rallied on the day and were little changed by the inflation numbers, as was the US dollar.