After October 2021, “core” inflation rose at a slower annual pace, while consumer prices remained unchanged from the month before October due to a fall in oil prices. Latest data From the Bureau of Labor Statistics released Tuesday morning.
Consumer Price Index (CPI) prices rose 0% from last month and 3.2% from a year earlier in October, down from September’s 0.4% monthly increase and a 3.7% annual gain in prices.
Economists had expected prices to rise 0.1% month-on-month and 3.3% year-on-year, according to data from Bloomberg.
As expected, lower energy costs held key points to a small gain, with energy prices falling 2.5% month-over-month, driven by lower gas prices, which fell 5% in October.
On a “core” basis, which strips out the more volatile costs of food and gas, prices rose 4.0% in October from a year earlier — less than the annual increase seen in September, according to Bloomberg data. Monthly core prices rose 0.2%, less than September’s monthly increase.
Economists had expected core prices to rise 0.3% from the previous month and 4.1% from a year earlier.
Other notable calls from the inflation axis included the shelter index, which rose 6.7% on an unadjusted, annualized basis — the slowest increase in a year.
The shelter index was the biggest driver of the monthly increase in core inflation, rising 0.3% month-on-month, but still slower than September’s 0.6% monthly advance.
Within core inflation, rent increases have been elevated but continue to show signs of easing.
The index for rents and owners’ equivalent rents rose 0.5% and 0.4% respectively on a monthly basis. Owners’ Equitable Rent is the hypothetical rent a homeowner would pay for the same home.
Other indexes that rose in October included motor vehicle insurance, which rose 1.9% after rising 1.3% the previous month. Indices for entertainment, personal care and clothing also rose in October.
Indices for used cars and trucks, new vehicles, airfares, and home furnishings and activities fell during the month. Monthly prices for used cars and trucks fell another 0.8% in October after falling 2.5% in September.
The food index rose 3.3% in October from a year earlier, and food prices rose 0.3% from September to October. The index for food at home rose 0.3% after rising just 0.1% in September.
Apple prices fell 7.9% month-on-month — the biggest decline since 1987.
Egg prices, however, rose 0.1% month-on-month after rising 0.9% in September. Prices fell 2.5% in August and 2.2% in July.
US stocks rose in early trading following the data release. The 10-year Treasury yield was down 14 basis points to trade at 4.49%.
Inflation is well above the Federal Reserve’s 2% target, though investors are mostly betting the Fed won’t raise rates in December — especially given Fed Chairman Jerome Powell’s rhetoric at the previous meeting.
“Taking the pace gives us, if we have to do more, a better sense of how much more we need to do,” Powell said after the Fed kept rates steady for a second straight meeting earlier this month.
Immediately after the data release, markets priced in a nearly 100% chance the Federal Reserve will keep rates unchanged in December. According to CME Group data.
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