Consumer Prices Unchanged in October as Oil Prices Drag Down Inflation
The latest data from the Bureau of Labor Statistics released Tuesday morning revealed that consumer prices in the United States remained unchanged from the prior month in October. The drop in oil prices was a significant factor in dragging down headline inflation, while “core” inflation rose at the slowest annual pace since September 2021.
According to the Consumer Price Index (CPI), prices rose 0% over last month and 3.2% over the prior year in October. This marks a deceleration from September’s 0.4% monthly increase and 3.7% annual gain in prices.
Economists had generally expected prices to increase 0.1% month-over-month and 3.3% year-over-year, according to data from Bloomberg.
Lower energy costs, particularly gas prices, held the headline figures to a smaller gain, with energy prices dropping 2.5% month-over-month in October.
On a “core” basis, which strips out the more volatile costs of food and gas, prices in October climbed 4.0% over last year — lower than the annual increase seen in September. Monthly core prices climbed 0.2%, also lower than September’s monthly rise.
Notable call-outs from the inflation print include the shelter index, which rose 6.7% on an unadjusted, annual basis — the slowest increase in a year. The shelter index was the largest factor in the monthly increase in core inflation, increasing 0.3% month-over-month but still slower than September’s 0.6% monthly jump.
Rent increases remained elevated but continued to show signs of easing within core inflation. The index for rent and owners’ equivalent rent rose 0.5% and 0.4% on a monthly basis, respectively.
Additionally, other indexes that rose in October included motor vehicle insurance, which increased 1.9%, as well as recreation, personal care, and apparel.
The data also showed that the food index increased 3.3% in October over the last year, with food prices rising 0.3% from September to October. Notably, apple prices dropped 7.9% month-over-month — the biggest drop since 1987. However, egg prices increased 0.1% month-over-month after rising 0.9% in September.
Following the release of the data, US stocks soared in early trading. The 10-year treasury yield dropped 14 basis points to trade near 4.49%.
Inflation has remained significantly above the Federal Reserve’s 2% target, though investors are largely betting the Federal Reserve won’t raise rates in December, especially given Fed Chair Jerome Powell’s recent rhetoric.
“Slowing down is giving us, I think, a better sense of how much more we need to do, if we need to do more,” Powell said earlier this month after the central bank held rates steady for a second consecutive meeting.
As a result, markets were pricing in a nearly 100% chance the Federal Reserve keeps rates unchanged in December, according to data from the CME Group.
This is Alexandra Canal, Senior Reporter at Yahoo Finance, bringing you the latest updates. Follow me on Twitter @allie_canal, LinkedIn, and email me at [email protected] for more information.
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