Last month, consumer prices in the United States slowed their ascent, prompting expectations that the strongest inflation in forty years may be abating.
Thursday, the Labor Department reported that the consumer price index rose 7.7% in the 12 months ended in October, the lowest rate of inflation since January and a lower gain than economists had anticipated. Prices excluding volatile food and energy costs increased by 6.3%.
Increasing costs for housing, auto insurance, new vehicles, and personal care were countered by declining costs for airfare, clothes, secondhand automobiles, and medical treatment.
Adobe Analytics released a supplementary analysis on Thursday indicating that internet prices for apparel, electronics, toys, and sporting goods decreased in October, while costs for groceries and other necessities continued to rise.
Similar to other nations, the U.S. struggles to control inflation, which is putting pressure on millions of people and dimming the economic picture as the Federal Reserve continues to raise interest rates for businesses and consumers.
In the midterm elections that concluded on Tuesday, inflation was a major concern for many voters, leading to the loss of Democratic seats in the House of Representatives. However, Republicans failed to achieve the massive political gains that many had anticipated.
Tired of applying the brakes?
To combat inflation, the central bank has hiked its benchmark interest rate six times so far this year. Although monetary tightening is expected to finally keep prices under control, the hikes increase the possibility that dramatically higher borrowing rates — for mortgages, auto purchases, and other expensive expenditures — may push the world’s largest economy into recession.
Investors hoped that indications that inflation is beginning to decline might persuade the Federal Reserve to halt the pace of interest rate hikes, causing stock markets to surge on Thursday. In early trade, the S&P 500 soared 3.2%, while the Dow gained 3.1% and the tech-heavy Nasdaq Composite surged 4.2%.
“In general, this is an encouraging indicator that inflationary pressures are beginning to abate after surging in the first half of 2022. However, this is only a modest deceleration in year-over-year inflation, and several months of such falls will be required before the Fed will contemplate suspending its tightening cycle “The Economist Intelligence Unit’s global economist Cailin Birch stated in a research note.
Indeed, rising costs continue to put pressure on consumers, as the price of essentials continues to rise.
Neil Saunders, managing director of GlobalData, said in a research note about the most recent CPI figures, “As much as the markets may welcome a moderation in the pace of inflation, an increase is an increase, and most American households are still having to find more money to fund daily activities.”
According to a new survey by GlobalData, many Americans are attempting to cut costs. According to the panel, half of respondents said they were driving less to economize on gas, while 49% said they were switching to cheaper supermarket brands and 61% said they were purchasing fewer non-food products.
The Associated Press provided reporting support.