U.S. consumer prices have risen again.
The Labor Department's Bureau of Labor Statistics reported on October consumer prices, which increased by 0.4% from the previous month, according to CNBC. The Bureau did not calculate the annual inflation rate due to data collection disruptions caused by last year's federal government shutdown.
Excluding a 0.4% decrease in June, the Consumer Price Index (CPI) has shown consistent month-over-month increases in recent months, with rises of 0.5% in May, 0.1% in July, 0.4% in August, and 0.6% in September. The latest 0.4% increase exceeded Dow Jones' forecast of a 0.3% rise.
The primary drivers of the price increase were higher food and energy costs. Food prices rose by 0.5%, with specific items such as snacks increasing by 1%, beef by 0.9%, and fish by 0.5%. Transportation services saw an increase of 0.8%. Housing costs rose by 0.3%, which the Bureau noted accounted for over 30% of the overall inflation rate. In contrast, prices for used cars and trucks fell by 1.2%.
This CPI announcement comes at a critical time as the Federal Reserve considers future interest rates. Last month, the Federal Open Market Committee (FOMC) voted 10 to 2 to maintain the current benchmark interest rate at 3.75% to 4%. However, market speculation suggests a rate increase may occur at next month's FOMC meeting.
Following the CPI report, Federal Reserve Governor Christopher Waller indicated that if inflation remains unchecked, a 0.5% rate hike could be on the table at next month's FOMC meeting, as reported by The New York Times. Waller, who participated in an event with the Bank of England on October 10, stated that if inflationary pressures improve as expected, a standard 0.25% increase might suffice. However, if core CPI, excluding energy and food, rises by more than 0.3%, the central bank may need to consider a more aggressive 0.5% hike.
Market sentiment largely views a rate increase next month as likely, with the debate centering on whether it will be 0.25% or the 0.5% proposed by Waller. James Mackin, a senior economist at Edward Jones, told USA Today, "This CPI is the last indicator the Fed will check before the December meeting," emphasizing the importance of the decision on the magnitude of the rate hike. Mackin added that given recent declines in oil prices and increased volatility in financial markets, he believes the Fed is more likely to opt for a 0.25% increase.
Kevin Hassett, chair of the White House Council of Economic Advisers, described the report as "disappointing," according to The New York Times.
Meanwhile, the average price of gasoline across the U.S. has fallen below $4 per gallon, which is seen as a positive sign. According to the American Automobile Association (AAA), the average price for gasoline was $3.97 per gallon as of October 10. This marks the first time the average price has dipped below $4 since July 20. The decline in gasoline prices is attributed to a 13% drop in crude oil futures last week. However, prices remain 30% higher than before the outbreak of the Iran war and 40% higher than at the beginning of the year, NBC reported.
* This article has been translated by AI.
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