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Inflation attained the slowest pace in October since January, but it remains at a record-high mark. October’s shift has lured the Federal Reserve to slow the interest rate hikes it used to tame price pressures. Meanwhile, the Labor Department announced that the CPI (consumer price index) rose by 7.7% in the same month. The new rate dropped from 9.1% in June to 8.2% in September. The core CPI that excludes volatile food and energy prices rose by 6.3%.
Generally, the core CPI dropped from 6.6% in September, marking the highest since August 1982. Bond yields and stock prices surged sharply last Thursday as traders welcomed ebbing price pressures. On the other hand, investors are optimistic that easing the inflation rate will allow the Fed to monitor interest rates. Fed’s aggressive borrowing rates aimed to curb investment, spending, and hiring.
The Federal Reserve has raised the benchmark interest rate severally by 0.75 basis points, bringing the range to 3.75% to 4%. In any case, the chairman of the Fed suggests that the stubborn price pressures, a tight labor market, and strong consumer demand might force officials to increase rates. Financial experts predict a 4.5% to 5% increase in borrowing costs rate next year. The latest CPI report offered investors hope that the rates will not rise above 5%.
Overall, the CPI rose by 0.4% from September to October monthly. This increased rate marked the same pace as in the previous month. The consumer price index measures what buyers pay for services and goods. Policymakers and investors watch core readings closely as a predictor of future inflation and a reflection of broad price pressures. Although many prices of goods and services fell in September, they remained much higher than in 2021.
The prices for trucks and cars that contributed massively to inflation dropped by 2.4% from September to October, following a 1.1% decline the previous year. Besides, apparel prices fell by 0.7%, while airline fares slowed by 1.1%. Healthcare costs dropped sharply last month, followed by a four percent decline in health insurance premiums. Finally, the rising housing costs remained a strong inflationary pressure source.
Homeowners’ imputed rent increased faster in September than in October, but it was at double the average pace before the Covid-19 pandemic. The explanation is that the housing cost rate sluggishly changes since they base on leases that cover a year-time shift. Above all, gasoline prices rose by 4% from September to October, reversing three decline months. The average price of gasoline was $3.81 per gallon.