First, the job market took a hit in October, with only 12,000 jobs added for the month. Now, it appears the inflation rate is on the rise once again after steadily decreasing as the Federal Reserve raised rates to get that key CPI (Consumer Price Index) under control.
The Bureau of Labor Statistics reported Wednesday, November 13, that inflation picked up in October, though some reported that it was in line with Wall Street expectations.
The CPI, which measures costs across a spectrum of goods and services, increased 0.2 percent for the month. That took the 12-month year-over-year inflation rate to 2.6 percent, up 20 basis points from September.
The readings were in line with the Dow Jones estimates.
Excluding food and energy, the move was even more pronounced, with the core CPI accelerating 0.3 percent for the month to 3.3 percent for the 12-month year-over-year inflation reading, also meeting forecasts.
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.
Reuters reports that the increase in the CPI did not change expectations that the U.S. central bank would deliver a third rate cut in December, given a softening labor market.
“Progress on inflation has started to stall,” said Michael Pugliese, a senior economist at Wells Fargo. “The time is fast approaching when the Fed will signal that the pace of rate cuts will slow further, perhaps to an every-other-meeting pace starting in 2025.”
Energy costs, which had declined in recent months, were flat in October, while the food index increased by 0.2 percent. On a year-over-year basis, energy was off 4.9 percent, while food was up 2.1 percent.
A 0.4 percent rise in the cost of shelter, which includes rent and hotel and motel rooms, was said to account for over half of the increase in the monthly CPI. Shelter costs gained 0.2 percent in September. The October rise in shelter costs doubled its September increase while jumping 4.9 percent on a year-over-year annual basis.
Used vehicle costs rose 2.7 percent for the month while motor vehicle insurance declined 0.1 percent, but still higher by 14 percent for the 12-month period.
Airline fares jumped 3.2 percent, while the price of eggs was down 6.4 percent but still 30.4 percent higher from the October 2023 report.
The BLS said in a separate report that inflation-adjusted average hourly earnings for workers increased 0.1 percent for the month and 1.4 percent from a year ago. The readings were said to be in line with the Dow Jones estimates.
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