Yahoo Finance Live anchors Brian Sozzi, Brad Smith, and Julie Hyman break down the Consumer Price Index data for the month of September.

Video Transcript

[AUDIO LOGO]

BRIAN SOZZI: That music has me fired up. Let's get after it here on what could be a very busy day for the markets. The consumer price index among three things we're watching here this morning. But the consumer price index came in at a headline increase of 8.2% year-over-year. Core prices rose 6/10 of a percent, similar to the gain in August. And most importantly, outside the optics of these hotter-than-expected numbers, guys, is you still don't get the sense that inflation is slowing.

And a good shout-out or a good call-out by Peter Boockvar over at Bleakley, an immediate reaction to these numbers, calling out that the peak Fed funds rate for April of next year now bumping up against 5%. So the immediate read here, why you're seeing stock futures down, the immediate read here is perhaps the Fed is going to have to stay more aggressive on raising interest rates perhaps a little bit longer than many people on Wall Street expected.

JULIE HYMAN: I mean, really, this just seems to be a confirmation of the 75 basis points that the market was also-- already mostly pricing in for the next meeting. I want to dig into this a little bit and look at where the inflation was coming from because I think it's important, Brad. It wasn't coming from energy. We know that, right? We saw a drop in energy prices overall of 2.1%.

However, there is one outlier there, and that is utility gas service up 2.9%. Natural gas prices have been going higher here. We've also seen an increase in overall energy services as a result of that. Another place that we saw an increase, transportation services and medical care services, as well as food seeing an increase. So all of these so-called transitory things, we are still seeing some increases in those.

BRAD SMITH: Yeah, shelter, food, and medical care expenses-- or indexes, those were the largest of many contributors to the monthly seasonally adjusted all items increase here. And for particularly where we've been looking at some of these increases across the board and really even comparing that with some of the data that had come out earlier this week, whether that be on PPI or whether that be on one of the data points I had cited yesterday within the digital price index where consumers are shopping online, it is an increase still in prices of the necessities, groceries, apparel.

And then on the other discretionary items that people-- companies, rather, are just trying to churn through. And people are looking at a heavy promotional cycle. That's where you're seeing some of those decreases start to trickle through more largely in electronics and things of that nature. But, again, this really spells out what is still very present in front of us and pressing in terms of the necessities still being at elevated levels and continuing to nudge up. And so that's going to be the larger question of when we actually start to see the deceleration-- not just the deceleration, but also the declines that the Fed is looking forward to.

BRIAN SOZZI: Yeah, a couple--

BRAD SMITH: Let's continue this--

BRIAN SOZZI: --things from me--

BRAD SMITH: Yeah. Sozz.

BRIAN SOZZI: Yeah, I was just going to say the 10-year, highest since 2008, the 10-year yield very important. Look, we talked to PepsiCo's CFO Hugh Johnston yesterday. He said he's raising prices in the fourth quarter again.

They rose price-- they raised prices third quarter, did in the second quarter, did in the first quarter. Not getting any sign from corporate America that they're going to suddenly pull back on price increases because the Fed is out there raising rates. I also note, too, November 2 Fed meeting now is looking a lot more hawkish, not good for the markets.

BRAD SMITH: All right, a great point there.