Inflation in the United States slowed last month in a sign that the Federal Reserve’s interest rate hikes are continuing to cool the consumer price spikes that have bedeviled consumers for the past two years.
Tuesday’s report from the Labor Department showed that lower gas prices helped cool overall inflation, which was unchanged from September to October, down from the 0.4% jump the previous month. Compared with a year ago, consumer prices rose 3.2% in October, down from 3.7% in September.
A vehicle is fueled at a gas station in Palatine, Ill., Wednesday, Nov. 8, 2023. On Tuesday, the Labor Department issues its report on inflation at the consumer level in October. (AP Photo/Nam Y. Huh)
Nam Y. Huh
Excluding volatile food and energy prices, so-called core prices also weakened unexpectedly. They rose just 0.2% from September to October, slightly below the pace of the previous two months. Economists closely track core prices, which are thought to provide a good sign of inflation’s future path. Measured year over year, core prices rose 4% in October, down from 4.1% in September.
The latest price figures arrive as Fed officials, led by Chair Jerome Powell, are considering whether their benchmark interest rate is high enough to quell inflation or if they need to impose another rate hike in coming months. Powell said last week that Fed officials were “not confident” that rates were high enough to tame inflation. The Fed has raised its benchmark interest rate 11 times in the past year and a half, to about 5.4%, the highest level in 22 years.
The costs of many services, notably rents, travel and health care, are still rising faster than before the pandemic. Services prices typically change more slowly than the cost of goods, because they largely reflect labor costs, which aren’t directly affected by interest rates.
The central bank’s rate hikes have increased the costs of mortgages, auto loans, credit cards and many forms of business borrowing, part of a concerted drive to slow growth and cool inflation pressures. The Fed is trying to achieve a “soft landing” — raising borrowing costs just enough to curb inflation without tipping the economy into a deep recession.
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Tuesday’s report from the Labor Department showed that lower gas prices helped cool overall inflation, which was unchanged from September to October, down from the 0.4% jump the previous month. Compared with a year ago, consumer prices rose 3.2% in October, down from 3.7% in September.
A vehicle is fueled at a gas station in Palatine, Ill., Wednesday, Nov. 8, 2023. On Tuesday, the Labor Department issues its report on inflation at the consumer level in October. (AP Photo/Nam Y. Huh)
Nam Y. Huh
Excluding volatile food and energy prices, so-called core prices also weakened unexpectedly. They rose just 0.2% from September to October, slightly below the pace of the previous two months. Economists closely track core prices, which are thought to provide a good sign of inflation’s future path. Measured year over year, core prices rose 4% in October, down from 4.1% in September.
The latest price figures arrive as Fed officials, led by Chair Jerome Powell, are considering whether their benchmark interest rate is high enough to quell inflation or if they need to impose another rate hike in coming months. Powell said last week that Fed officials were “not confident” that rates were high enough to tame inflation. The Fed has raised its benchmark interest rate 11 times in the past year and a half, to about 5.4%, the highest level in 22 years.
The costs of many services, notably rents, travel and health care, are still rising faster than before the pandemic. Services prices typically change more slowly than the cost of goods, because they largely reflect labor costs, which aren’t directly affected by interest rates.
The central bank’s rate hikes have increased the costs of mortgages, auto loans, credit cards and many forms of business borrowing, part of a concerted drive to slow growth and cool inflation pressures. The Fed is trying to achieve a “soft landing” — raising borrowing costs just enough to curb inflation without tipping the economy into a deep recession.
US consumer inflation eased in October as cheaper gas slowed overall price increases
Inflation in the United States slowed last month in a sign that the Federal Reserve’s interest rate hikes are continuing to cool the consumer price spikes that have bedeviled consumers for the past two years.
