Consumer prices in the United States rose 3.7% year over year in September, marking the continuation of a prolonged period of elevated inflation. According to the US Bureau of Labor Statistics, annual consumer price index readings have now exceeded 2% for approximately 65 consecutive months, or more than five years. This represents the longest stretch of above-target inflation in the 21st century, and ranks among the most persistent periods since the late 1940s.
Federal Reserve officials have signalled alarm that Americans may be accepting high prices as permanent. Cleveland Federal Reserve President Beth Hammack said consumers are beginning to treat elevated inflation as "just a fact of life." The New York Federal Reserve's Survey of Consumer Expectations found that one-year inflation expectations rose to 3.9% in September, the highest reading in over three years.
The concern among central bankers is that entrenched inflation expectations could become self-fulfilling. If businesses and workers anticipate persistent price increases, they may raise prices or demand higher wages preemptively, further pushing inflation upward and undermining the effectiveness of interest rate increases. Economists view rate hikes as the Fed's primary tool for cooling demand and prices.
American consumers report significant financial strain from years of high inflation. A University of Michigan survey found consumer sentiment at record lows this year, with over 50% of respondents citing high prices as their main reason for deteriorating personal finances. Year-over-year inflation has outpaced wage growth in recent months, eroding purchasing power.