Consumer prices in the United States stabilized in October, with Americans spending on gasoline falling and the annual increase in core inflation falling to the lowest level in two years, strengthening views that the Federal Reserve (the US central bank) may have finished raising interest rates.
The weaker-than-expected inflation readings, published by the Department of Labor’s Bureau of Labor Statistics on Tuesday, led to a decline in US Treasury bond yields and a rise in the stock market.
The consumer price index rose 0.4 percent in September. Gasoline prices fell 5.0 percent after rising 2.1 percent in September.
Food prices increased 0.3 percent, after rising 0.2 percent in each of the past three months. The rise was led by an increase in the prices of meat, fish and eggs. Prices of cereals and bakery products rose, while prices of fruit and vegetables remained unchanged.
In the 12 months through October, the CPI jumped 3.2 percent after rising 3.7 percent in September.
Economists polled by Reuters had expected the index to rise 0.1 percent on a monthly basis and 3.3 percent on an annual basis.
Although the pace of increase in consumer prices has slowed on an annual basis from a peak of 9.1 percent in June 2022, this trend has stopped in the past few months against the backdrop of a strong economy supported by a market that witnesses more job opportunities than the number of job seekers. Inflation remains above the Federal Reserve’s target of 2 percent.
Financial markets and most economists believe that the US central bank’s monetary tightening policy is over, a view opposed by the bank’s chairman, Jerome Powell, and other policymakers.
Powell said last week, “If further policy tightening is appropriate, we will not hesitate to do so.”
Since March 2022, the Federal Reserve has raised interest rates by 525 basis points to the current range between 5.25 and 5.50 percent.
Excluding volatile food and energy component prices, the CPI rose 0.2 percent amid rising housing rental costs. The core consumer price index rose 0.3 percent for the second month in a row.
The index rose 4.0 percent year-on-year in October, the smallest increase since September 2021, after rising 4.1 percent in September of this year.
2023-11-14 18:23:35
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