Inflation is spreading deeper into the U.S. economy, slamming the door on hopes the Federal Reserve will dial back interest-rate hikes that threaten to tip the country and perhaps the world into recession.
Core inflation, excluding food and energy, jumped to a 40-year high of 6.6% in September from a year ago — outpacing forecasts and triggering a slide in U.S. bond markets, as investors bet that the Fed will be forced into two more 75 basis-point increases this year.
That spells trouble for a U.S. economy that’s already been slowing down, as soaring prices eat into paychecks while higher borrowing costs crush the housing market. Thursday’s inflation report showed how broad price pressures are, with big jumps in the cost of food, shelter and medical services.