US inflation rose 3.2% in October — a rather lower-than-expected number that gave relief to investors and raised hopes the Federal Reserve could done with its rate-hiking campaign.
The Consumer Price Index — which tracks changes in the prices of on a regular basis goods and services — decelerated from the September’s 3.7% advance and was a tick below the three.3% gain economists had expected, in accordance with data by the Bureau of Labor Statistics released Tuesday.
Although still uncomfortably above the Federal Reserve’s 2% goal, it was the primary time since June that inflation had slowed month-over-month as gasoline prices eased and increases in housing costs slowed and stirred hopes that prices are finally headed in the precise direction.
The Dow and S&P 500 — which dropped last week after Fed Chairman Jerome Powell signaled the central bank wouldn’t be “misled by just a few months of excellent data” because it stayed vigilant on prices — rose in early trading.
“The bar for further rate hikes is getting higher and better,” Wells Fargo’s chief economist Jay Bryson said on Bloomberg TV after Tuesday’s report. “That is a superb start in that journey, but you would want to see just a few more months of 0.2 before saying mission completed.”
The three.2% headline inflation figure is barely below the three.3% figure economists expected, in accordance with estimates from FactSet, and stays well above the Federal Reserve’s 2% inflation goal.AP
The shelter index that tracks housing costs rose 0.3%, the federal agency said Tuesday. While that offset a decline within the gasoline index and accounted for the vast majority of the CPI’s advance, it was half the pace of the prior month.
On a monthly basis, consumer prices remained unchanged at 0.4%, attributed to a 5% decline within the gasoline index.
As of Tuesday, a gallon of gas within the US averages $3.35, in accordance with AAA, down from the $3.65 average price per gallon when September’s CPI report was released, and the $3.85 the month prior.
Core CPI — a number that excludes volatile food and energy prices and serves as a closely watched gauge amongst policymakers for long-term trends — increased to 0.3% in October, a 4.0% advance from a 12 months ago.
Though October’s CPI report trends positively towards the Fed’s 2% inflation goal, it doesn’t confirm whether the Fed is prone to push rates of interest beyond their current range — between 5.25% and 5.5% — following their December policy meeting, set to happen Dec. 12 to Dec. 13.
Fed Chair Jerome Powell has kept the door open for one more hike, reiterating during a hawkish speech on the International Monetary Fund’s policy panel in Washington, DC, last week: “If it becomes appropriate to tighten policy further, we is not going to hesitate to achieve this.”
“We’ll keep at it until the job is finished,” Powell added of the Fed’s 2% inflation goal, which the US economy hasn’t seen since 2012.
Meanwhile, the CME FedWatch Tool projects a greater than than 85% probability that the Fed doesn’t raise rates again this 12 months — up from a 54% probability a month ago.
Fed Chair Jerome Powell said of rates of interest on the International Monetary Fund’s policy panel in Washington, DC, last week: “If it becomes appropriate to tighten policy further, we is not going to hesitate to achieve this.”Getty Images
For months now central bankers have mulled one addition 25 basis point-hike before 12 months’s end in hopes of an economic slowdown, and economists have been divided on what the Fed’s next move is.
Economists expected that the Fed was leaning towards one other rate hike after a blowout September jobs report that said the US economy added 336,000 jobs throughout the month.
Nevertheless, October’s 150,000 payroll gains showed that September’s surge in jobs was only temporary.