Oil prices fell on Thursday morning following new CPI data that showed core inflation in the United States had risen to the highest level in four decades.
WTI crude prices fell 1.57% to $85.90, while Brent crude fell 1.16% to $91.38 per barrel on the news, which showed CPI came in higher than anticipated, renewing fears that the Federal Reserve could aggressively raise interest rates in November.
That interest rate hike could further stymie economic growth, easing the demand for crude oil.
Core inflation—a measure of price increases excluding food and energy costs—rose 6.6% over the last year—a level not seen since 1982, the US Labor Department shared on Thursday. Total inflation, which includes food and energy, rose 8.2% in September from September 2021. To compare, CPI rose 8.5% in July and 8.3% in August, from the respective year-ago periods.
September’s inflation figures would have been worse had it not been for gasoline prices which fell in the month. The gasoline price index fell 4.9% in September.
“The energy index declined 2.1 percent in September after falling 5.0 percent in August,” the US Labor Department Summary said.
“The gasoline index fell 4.9 percent over the month following a 10.6-percent decrease in August. (Before seasonal adjustment, gasoline prices fell 5.6 percent in September.) However, the index for natural gas increased in September, rising 2.9 percent after increasing 3.5 percent in August. The electricity index also increased over the month, rising 0.4 percent,” adding that the energy index rose 19.8 percent over the past 12 months.
“The gasoline index increased 18.2 percent over the span and the fuel oil index rose 58.1 percent. The index for electricity rose 15.5 percent over the last 12 months, and the index for natural gas increased 33.1 percent over the same period.”
U.S. retail prices for a gallon of gasoline were down on Thursday from Wednesday but are still up from the month-ago levels. On Thursday, gasoline prices averaged $3.913 per gallon, compared to $3.707 per gallon a month ago.
Along with the crude oil price slide on Thursday, US stock futures fell. The dollar and Treasury yields rose.
The inflation numbers portend an aggressive move by the Federal Reserve next month.
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By Julianne Geiger for Oilprice.com
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