(Nov 10): A key gauge of US consumer prices posted another firm advance in October, likely keeping the Federal Reserve on track to raise interest rates next month.
The consumer price index (CPI), excluding food and energy, rose 0.3% from a month earlier, according to Bureau of Labor Statistics (BLS) data out on Tuesday. Overall prices climbed 0.4%. The BLS didn’t publish year-over-year changes because data collection was interrupted last October during the government shutdown.
The report suggests price pressures continued to build just ahead of this month’s midterm elections, when Democrats retook both chambers of Congress following campaigns largely focused on the cost of the living. The Iran war, tariffs and the data centre boom have all helped fan inflation this year.
Through October, the core CPI index was up 3.7% on a three-month annualised basis and 2.7% on a six-month annualised basis, according to data compiled by Bloomberg.
It’s the last CPI report Fed officials will see before their Dec 8-9 policy meeting. Investors expect them to raise interest rates at that gathering to counter inflation, following a quarter-point increase in September and a decision to leave rates unchanged in October.
US Treasury yields rose and stock futures fell on the news. Ahead of the release, Fed governor Christopher Waller said if the core CPI were to rise by 0.3% or more, the central bank may need to hike rates by a larger, half-point increment.
The CPI report showed the overall advance reflected increases in food prices, recreation and medical care. Gasoline rose 1% in October, though oil prices have plummeted over the last week amid rising optimism around diplomatic efforts to end the war in the Middle East.
Other categories suggested the energy shock continues to filter through the economy: Airfares rose 0.4%, while delivery services prices also increased.
Grocery prices jumped 0.4%, the most since April, while owners’ equivalent rent, a gauge of housing costs that is the largest component of the CPI, rose 0.3%. Electricity prices jumped 0.9%.
Uploaded by Felyx Teoh