US consumer prices increased in October, as was expected. This increase is attributed to higher housing costs including rent. It indicates that since the middle of this year, inflation has been slowing down.
The Federal Reserve may be less likely to cut interest rates in the coming year.
According to the Labor Department report released on Wednesday, the Consumer Price Index (CPI), which measures consumer prices, rose 0.2% in the last four months. This is consistent with the forecasts of economists.
The most significant contribution to the cost of food and shelter was made by those who buy their own homes.
Rents and accommodation prices accounted for over half the CPI increase.
Comparatively, the cost of shelter had increased by 0.2% during September. The rise in food prices was also a factor, with a slight increase of 0.2% following a previous 0.4%.
In the food category, prices increased by 0.1% due to an increase in bread, milk products, non-alcoholic beverages and fruits and veggies, offsetting declines for meat, poultry and fish.
The price of eggs has dropped by 6.4%.
The energy prices showed mixed trends. Gasoline prices continued to decline by 0.9% while electricity prices soared 1,2%, and natural gas costs rose 0.3%.
The CPI increased by 2.6% on an annual basis in the twelve months to October. This is up from the 2.4% growth in September.
This is partly due to the fact that the low readings from last year were excluded.
The inflation report follows the election of Donald Trump as President, and Kamala Harris’ defeat by former Vice-President Donald Trump.
Consumer prices are expected to rise if Trump’s economic plan is implemented, which includes tax reductions and tariffs on imported goods.
The promise to deport undocumented migrants in mass is expected to also tighten up the labor market and increase business costs, which could be passed onto consumers.
Even though the underlying inflation rate was slightly higher in October than in September, the Federal Reserve is expected to proceed with its planned cut of interest rates in December. This will be the third cut for this year.
As updates unfold, this post US consumer prices rose as predicted in October; housing costs led gains could be revised.
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