The rise in the consumer price index in October was weaker than expected. This shows that while inflation remains a threat to the US economy, pressures are starting to ease.
The index, a broad measure of the cost of goods and services, increased 0.4% over the month, up 7.7% from a year ago. Bureau of Labor Statistics announcement Thursday. The Dow Jones’ respective estimates were up 0.6% and her 7.9%.
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Excluding volatile food and energy costs, the so-called core CPI increased by 0.3% on a monthly and 6.3% yearly basis, compared to estimates of 0.5% and 6.5% respectively.
A 2.4% decline in used car prices helped to ease inflation. Apparel Prices Dropped 0.7%, Medical Services Dropped 0.6%.
“The report exaggerates the fact that inflation is happening, but claims it is,” said Mark Zandy, chief economist at Moody’s Analytics. It is clear that it has peaked and rolled over at , with all trendlines suggesting it will continue to moderate, assuming nothing gets off track.”
The market reacted sharply to the report, with the Dow Jones Industrial Average gaining more than 1,000 points. US Treasury yields plummeted, with the policy-sensitive 2-year Treasury bond dropping 0.3 points to 4.33%.
“The inflation trend is a welcome development and great news from a reporting perspective,” said Michael Arone, chief investment strategist at State Street Global Advisors. “But investors are still gullible.” , we’re impatiently waiting for Powell’s pivot, we don’t know if it’s coming any time soon, so I think the frenzy this morning is a bit of an overreaction.”
The “Powell Pivot” comments suggest that Federal Reserve Chairman Jerome Powell and his central bank colleagues will soon slow or halt the pace of aggressive rate hikes they have been deploying to keep inflation down. refers to the expectations of
Despite the slowdown in inflation, it is still above the Fed’s 2% target, and several areas of the report show that the cost of living remains high.
San Francisco Fed President Mary Daly said, “One month of data doesn’t mean you win. I think it’s very important to think that this is just one piece of positive information, but we’re looking at a series of We’re looking at all the information,” he said. according to CPI data.
“We need to be determined to bring inflation down to 2% on average,” he said in a question-and-answer session with the European Economic and Financial Center. “That’s our goal, that’s what Americans depend on, and that’s what we’re trying to do. So we’re going to keep adjusting our policies until that job is fully done. .”
Shelter costs, which account for about one-third of the consumer price index, rose 0.8% in a month, the largest monthly increase since 1990, and 6.9% from a year ago, the lowest since 1982. was of the highest standard. Also, the price of fuel oil has exploded. It is up 19.8% on a monthly basis and up 68.5% on a 12-month basis.
The food index rose 0.6% month-on-month and 10.9% year-on-year, while energy rose 1.8% and 17.6% respectively.
Rising inflation prompted workers to take another wage cut in October. According to another BLS release, his real average hourly earnings fell by 0.1% on a monthly basis and by 2.8% on an annual basis.
another labor department report Thursday showed the number of unemployment claims filed last week rose to 225,000, up 7,000 from the previous week.
The latest inflation comes as the Federal Reserve rolls out a series of aggressive rate hikes to try to keep inflation hovering near its highest level since the early 1980s. .
In early November, the central bank approved a fourth consecutive increase of 0.75 percentage points, raising the benchmark interest rate to the 3.75%-4% range, the highest level in 14 years. The market expects the Fed to continue raising rates, but the pace could slow until the Federal Fund rate hits his 5% mark early next year.
Traders quickly changed their expectations on the Fed’s next move. Futures tracking the Fed Fund rate show his 80.6% chance of a 0.5 percentage point move in December, up from 56.8% the day before. CME Group data.
“One data point does not make a trend. All we have to expect is to get another downtick. [in CPI] Randy Frederick, Managing Director of Trading Derivatives at Charles Schwab, said: It’s kind of like a coil spring.”
It’s important to keep inflation under control as we head into the holiday shopping season. A recent survey by Clever Real Estate found that about one in three Americans plans to cut spending this year, citing rising prices.
