The key inflation measure known as the Consumer Price Index released on Thursday morning showed consumer prices came in hotter than expected in September.
“The report shows inflation is not subsiding. Indeed, it may even worsen next month with gas prices rising once again,” Walden said. “In my view, this situation insures the Federal Reserve will continue to hike interest rates significantly in the months ahead.
“Such increases will increase the odds of a recession in late 2022 or early 2023,” he warned. “I now put the chance of a recession at 75%.”
Ahead of the Thursday report, Walden told WRAL News: “People should understand that we’re probably looking at a challenging six to eight month period, where in order to squeeze out inflation, we’re going to have to unfortunately tighten our belts.”
On a monthly basis, overall consumer prices increased by 0.4% from August, according to data from the Bureau of Labor Statistics. Economists had projected that the monthly figure would rise by 0.2%.
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Prices are still rising
On an annual basis, prices rose by 8.2% in September, a slower increase than the 8.3% rise seen in August, the Consumer Price Index, which measures the changes in prices for a basket of consumer goods and services, showed. Economists had projected the pace of price increases would slow to 8.1% last month.
Core CPI, which strips out the volatile food and energy categories, measured a 6.6% increase in September year over year, setting a new high this year and reaching a level not seen since August 1982.
The month-to-month core reading showed prices rose 0.6% in September, matching August’s increase of 0.6%, a number that surprised investors and triggered a market meltdown as fears grew that persistent inflation would prompt even more aggressive action from the Fed.
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The Fed has raised its benchmark interest rate five times this year as part of a plan to cool the economy by squashing demand from consumers and businesses.
Dow futures tumbled more than 400 points, or 1.5%, after the report was released, S&P 500 futures fell 1.8%, and Nasdaq futures were 2.6% lower.
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