2024-11-13 19:15:00
inflation rate hit 2.6% in October, meeting expectations”/>Inflation perked up in October though pretty much in line with Wall Street expectations, the Bureau of Labor Statistics reported Wednesday.
The consumer price indexwhich measures costs across a spectrum of goods and services, increased 0.2% for the month. That took the 12-month inflation rate to 2.6%, up 0.2 percentage point from September.
The readings were both in line with the Dow Jones estimates.
Excluding food and energy, the move was even more pronounced. The core CPI accelerated 0.3% for the month and was at 3.3% annually, also meeting forecasts.
Stock market futures nudged higher following the release while Treasury yields fell. Following the release, traders sharply raised the odds that the Federal Reserve will cut its key interest rate by another quarter percentage point in December.
Energy costs, which had been declining in recent months, were flat in October while the food index increased 0.2%. On a year-over-year basis, energy was off 4.9% while food was up 2.1%.
Despite signs of inflation moderating elsewhere, shelter prices continued to be a major contributor to the CPI move. The shelter index, which carries about a one-third weighting in the broader index, climbed another 0.4% in October, double its September move and up 4.9% on an annual basis. The category was responsible for more than half the gain in the all-items CPI measure, according to the BLS.
Used vehicle costs also rose, up 2.7% on the month while motor vehicle insurance declined 0.1% but was still higher by 14% for the 12-month period. Airline fares jumped 3.2% while eggs tumbled 6.4% but were still 30.4% higher from a year ago.
Inflation-adjusted average hourly earnings for workers increased 0.1% for the month and 1.4% from a year ago, the BLS said in a separate report.
The readings took inflation further away from the Federal Reserve’s 2% goal and could complicate the central bank’s monetary policy strategy going forward, particularly with a new administration taking over the White House in January.
“No surprises from the CPI, so for now the Fed should be on course to cut rates again in December. Next year is a different story, though, given the uncertainty surrounding potential tariffs and other Trump administration policies,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “The markets are already weighing the possibility that the Fed will cut fewer times in 2025 than previously thought, and that they may hit the pause button as early as January.”
President-elect Donald Trump’s plans to implement more tariffs and government spending have the potential both to boost growth and aggravate inflation, which remains a substantial problem for U.S. households despite easing off its meteoric peak in mid-2022.
Consequently, traders in recent days have scaled back their anticipation for Fed rate cuts ahead. The central bank already has lopped off 0.75 percentage point from its key borrowing rate and had been expected to move aggressively ahead.
However, traders now expect just another three-quarters of a point in cuts through the end of 2025, about half a point less than priced in before the presidential election.
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#CPI #inflation #October
What are the main factors contributing to the rise in shelter prices impacting the inflation rate in October?
**Interview with Economic Analyst Dr. Emily Roberts on October Inflation Data**
*Interviewer: Good evening, Dr. Roberts. Thank you for joining us today. We’ve just seen the latest report from the Bureau of Labor Statistics indicating that the annual inflation rate rose to 2.6% in October. What are your initial thoughts on this data?*
**Dr. Roberts:** Thank you for having me. The increase to 2.6% is interesting but not unexpected. It aligns closely with Wall Street expectations, which indicates that the markets had already priced this in. The overall monthly increase of 0.2% reflects some stability, despite ongoing concerns about inflation rates.
*Interviewer: The consumer price index (CPI) shows that shelter prices have been a major contributor to this rise. Could you elaborate on that?*
**Dr. Roberts:** Absolutely. The shelter index comprises about one-third of the overall CPI, so its impact is significant. The 0.4% increase in October, which is double that of September, suggests a continued tightening in housing costs. This has been a persistent issue and is fueling inflation concerns, especially for consumers facing rising rents.
*Interviewer: Excluding food and energy, the core CPI saw a 0.3% rise with an annual increase of 3.3%. How should we interpret these figures?*
**Dr. Roberts:** The core CPI is crucial for understanding underlying inflation trends since it strips away the more volatile food and energy sectors. A 3.3% annual increase, alongside a monthly 0.3% rise, indicates that inflationary pressures remain, particularly in consumer goods that are essential. This could lead to heightened scrutiny from the Federal Reserve regarding interest rates.
*Interviewer: Speaking of interest rates, how are these inflation figures likely to influence the Federal Reserve’s decisions in the coming months?*
**Dr. Roberts:** The market response to this data has already seen futures nudging higher, and traders are increasing the odds of a rate cut in December. The Fed is likely to weigh this inflation data carefully, especially since consumers are still feeling the pinch from rising costs in housing and transportation. A rate cut could be a way to support economic growth, but the Fed will have to balance that with maintaining price stability.
*Interviewer: we’ve seen some fluctuating costs in categories like food and energy. What should consumers be aware of moving forward?*
**Dr. Roberts:** Consumers should prepare for continued volatility in some sectors. While energy costs were flat recently, food prices are still on an upward trajectory, which can affect family budgets. It’s essential for consumers to stay informed about these trends and plan accordingly, whether that means adjusting spending habits or budgeting more for essentials.
*Interviewer: Thank you, Dr. Roberts, for your insightful analysis on this month’s inflation report. We appreciate your time.*
**Dr. Roberts:** My pleasure! Thank you for having me.
