U.S. Inflation Eases in October

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Inflation slowed in October, a sign that the Federal Reserve’s interest rate hikes are cooling consumer price increases. The price of goods and services paid by U.S. consumers rose 3.2% in the year-ending October, according to the Consumer Price Index (CPI) for All Urban Consumers measured by the Bureau of Labor Statistics. That was a smaller result that the 3.7% increase seen in September and just slightly above the recent low of 3% from June. Annual inflation as of October was a touch below economists’ expectations of 3.3% but still notably beyond the Federal Reserve’s target of 2%. However, inflation has cooled considerably since reaching a 40-year high of 9.1% in June 2022. Core inflation, which strips out volatile costs of food and energy, has displayed a downward trajectory in prices. That index edged down on a year-over-year basis from 4.1% in September to 4% in October, the smallest annual increase since September 2021. The energy index fell 4.5% in the year-ending October, with the lower gas prices (-5.3%) contributing to that downturn. The cost of shelter, which is keeping the overall inflation rate high, rose 6.7% from a year ago. Still, that was the slowest increase in a year. However, the shelter index has a well-documented lag effect. Excluding the cost of shelter, consumer prices were up just 1.5% year-over-year in October.