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U.S consumer prices rose less than expected in October, pushing the annual increase below 8% for the first time in eight months, the strongest signs yet that inflation was starting to subside, which would allow the Federal Reserve to dial back its hefty interest rate hikes.
The report from the Labor Department on Thursday also showed underlying consumer prices increasing moderately last month, sending the dollar tumbling against a basket of currencies and U.S. Treasury prices rallying in early trade. U.S. stocks opened sharply higher. The report followed on the heels of data last week showing some loosening in labor market conditions.
„Inflation is still too high, but there is evidence that the Fed has turned the corner in its fight and that the pace of future interest rate increases will begin to slow,“ said Christopher Rupkey, chief economist at FWDBONDS in New York.
„The market is on fire with the long-wished for inflation moderation finally starting to appear.“
The consumer price index rose 0.4% last month after climbing by the same margin in September. Economists polled by Reuters had forecast the CPI would advance 0.6%. Soaring rents accounted for more than half of the increase in the CPI. Gasoline prices rebounded after three straight monthly decreases.
While food prices increased 0.6%, the pace was much slower relative to prior months. The price of food consumed at home rose 0.4%, the smallest gain since December 2021. There were increases in the prices of meats, poultry, fish, eggs, cereals and bakery products.
