Year-on-year price growth is the weakest since January and has fallen below 8% for the first time since February. Hopes that inflation had already peaked and could now ease further has strengthened equity markets. Investors are hoping that the US central bank (Fed) will no longer raise interest rates at as fast a pace as it has been until now.
Analysts interviewed by Reuters had estimated that consumer prices would rise by 0.6% on a monthly basis. They expected annual inflation to ease to around 7.9%.
Year-on-year growth in consumer prices peaked in June. At the time, it was 9.1%, the largest increase since November 1981.
So-called core inflation, which excludes volatility in food and energy prices, was also weaker than expected. It increased 0.3% month-on-month and slowed to 6.3% year-on-year from 6.6% in September.
The Fed raised its benchmark interest rate by 0.75 percentage points for the fourth consecutive week last week. The central bank said its fight to reduce inflation to the two percent target would require further increases in borrowing costs.
Sales put pressure on prices
Gasoline prices rose again in the United States after a three-month drop. But commodity price inflation is slowing as demand returns to labor-intensive services and disrupted global supply chains are restored. Retailers want to get rid of the inventory of older products to make room for new ones, forcing them to offer discounts.
The US dollar weakened following the release of inflation data. The dollar index, which expresses the value of the dollar against the world’s six major currencies, lost more than one percent to 109.17 points just before 3pm CET.
US stock indices, on the other hand, strengthened strongly prior to the start of trading. Equities have been helped by expectations that the Fed will slow the pace of rate hikes next month due to weaker inflation and is likely to stop raising rates before the key rate hits 5%.
Inflation is slowing in the Czech Republic
Economic
