U.S. Consumer Prices Increase Less Than Expected in October

• U.S consumer prices increased less than expected in October and underlying inflation appeared to have peaked, which would allow the Federal Reserve to dial back its hefty interest rate hikes.
• The consumer price index rose 0.4% in October after climbing by the same margin in September. Economists polled by Reuters had forecast the CPI would advance 0.6%. In the 12 months through October, the CPI increased 7.7% after rising 8.2% on the same basis in September. Even with the slowdown in the inflation rate, it still remains well above the Fed’s 2% target.
• Nevertheless, it was the first time since February that the annual increase in the CPI was below 8%. The annual CPI peaked at 9.1% in June, which was the biggest advance since November 1981.
• Though gasoline prices increased after three straight monthly declines, goods inflation is slowing as demand rotates back to labour-intensive services and fractured global supply chains recover. Retailers are also sitting on excess merchandise, forcing them to offer discounts to clear shelves. However, the cost of living remains high.
• Shelter costs, which make up about one-third of the CPI, rose 0.8% for the month, the largest monthly gain since 1990, and up 6.9% from a year ago, their highest annual level since 1982. Also, fuel oil prices exploded 19.8% higher for the month and are up 68.5% on a 12-month basis.
• The food index rose 0.6% for the month and 10.9% annually, while energy was up 1.8% and 17.6%, respectively.

(Sources: Reuters & CNBC)