A sign that the measures taken by the American central bank are starting to bear fruit, inflation in the United States is at its lowest level since January 2022. The latter slowed in October, settling at 7.7% compared to the previous year and 0.4% from September, the US government announced on Thursday (November 10).
Used car prices, which fell for the fourth consecutive month, contributed to the slowdown in inflation from September to October. The prices of clothing and medical care have also fallen. The rise in food prices has slowed down. Conversely, energy prices rose in October after falling in August and September.
This main inflation rate, at its lowest in months, “Supports the idea that the inflation peak is on and that the US Federal Reserve [Fed] considering “, says Alexandre Baradez, an analyst at IG France. The Fed is expected to continue raising interest rates to stem residual inflation, but will do so with less vigor than before as its policy begins to pay off. According to Mr. Baradez, investors are waiting “most likely a rate hike that will not exceed fifty basis points” at the Fed’s next monetary policy meeting in mid-December and will begin “imagine that the rates could start to go down”.
“We expect this to mark the start of a much longer disinflationary trend which we believe will convince the Fed to end its [hausses] early next year “said Paul Ashworth, chief economist for North America at Capital Economics.
specter of recession
Before the slowdown in inflation began to manifest itself, the Fed had drastically raised policy rates since March. In early November, it raised its key key rate by three-quarters of a percentage point for the fourth time in a row to a range of 3.75% to 4%, the highest in nearly fifteen years.
However, many economists had warned that by continuing to tighten credit, the central bank could trigger a recession within the next year. The Fed has already hiked its benchmark interest rate six times in large steps this year, increasing the risk that prohibitive lending rates for homes, cars and other high-value items could tip the world’s largest economy into recession. .
Even before the inflation data was released, some indicators showed that price inflation had started to decline. The sharp wage increases of the past eighteen months have stabilized. With the exception of automakers, which are still struggling to acquire the chips needed for their production, supply chain disruptions have largely subsided. As for listing sites, like Apartment List or Zillow, they now show falling rents.
