The US consumer price index (CPI) rose 3.2% in October from a year ago, according to data released by the Bureau of Labor Statistics on Tuesday. This was the smallest annual increase since September 2021.
The core CPI, which excludes food and energy prices, rose 4% from a year ago, also the smallest annual increase since September 2021.
The headline CPI rose 0.1% from the previous month, while the core CPI rose 0.2%.
Analysts surveyed by Dow Jones had expected the headline CPI to rise 0.3% and the core CPI to rise 0.4%.
The October CPI report provides some relief from concerns that inflation is out of control. However, inflation is still well above the Federal Reserve’s target of 2%.
The Fed is expected to raise interest rates in December in an effort to cool inflation.
Energy Prices Decline
The decline in headline CPI was driven by a 2.5% decline in energy prices from the previous month. This was the largest monthly decline since February 2020.
Gasoline prices fell 3.3% from the previous month, while natural gas prices fell 1.4%.
Food Prices Increase
Food prices rose 0.3% from the previous month. This was the largest monthly increase since April 2022.
The cost of meat, poultry, fish, and eggs rose 1.4% from the previous month. The cost of dairy products rose 0.4%.
Core CPI Still Above Fed’s Target
The increase in the core CPI was driven by a 0.3% increase in the cost of shelter. The cost of rent rose 0.4%, while the cost of owner’s equivalent rent rose 0.2%.
The cost of healthcare rose 0.5%, while the cost of transportation rose 0.2%.
The Fed is likely to be encouraged by the decline in headline CPI, but it is likely to remain concerned about the core CPI, which is still above its target.
The Fed is expected to raise interest rates in December by 0.25 percentage points. It is also possible that the Fed will raise interest rates by 0.5 percentage points in December.
