The Bureau of Labor Statistics' October monthly inflation report showed that the consumer price index had expanded by 3.2% on a yearly basis, a lower rate than the previous month's 3.7% and significantly smaller than the 9.1% figure reached in June 2022. Gasoline prices made an important contribution to the fall, while housing prices also proceeded to calm.
In October, inflation dropped, part of a widespread slowdown as fuel prices decreased during the month. Nevertheless, price pressures still linger beneath the surface and it could take some time for them to return to their earlier numbers before the pandemic, economists noted. "There is certainly a deflationary trend in place," Sarah House, a senior economist from Wells Fargo Economics, stated. Tuesday, the U.S. Bureau of Labor Statistics reported the consumer price index was up 3.2% from the same month the previous year, a decrease from the 3.7% in September.
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We need to realize that the situation is dire and take steps to resolve it promptly.
We need to come to terms with the gravity of the situation and take swift action to address it.
The CPI is a major indicator of inflation, indicating the speed at which the costs of numerous items such as vegetables, haircuts, and concert tickets are growing in the US economy. October's number indicates a substantial improvement from the pandemic-high of 9.1% from June 2022 - the strongest since November 1981 - with prices growing at a much more moderate pace.Mark Zandi, Moody's Analytics chief economist, stated: “Inflation is gradually declining, and all the figures point in a positive direction. It looks like by this time next year, inflation will have returned to the Federal Reserve's desired rate of 2% per annum, something that will be very comfortable for consumers.” The Fed's long-term goal is to sustain an annual 2% inflation rate.
According to Tuesday's CPI report, regular-grade gasoline prices dipped by 33 cents a gallon between Oct. 2 and Oct. 30, from $3.80 to $3.47. This marks a 5% decrease and the average price at the pump was $3.37 a gallon as of Nov. 13, per AAA’s data. This pullback offsets the 10.6% hike recorded in August, which was strongly impacted by changes in the crude oil market. “We had a big increase in gas prices back in August and now are seeing an unwinding of that,” commented one expert. She went on to say, “what gas prices give us one month, they can taketh away in another.”
The volatility of energy and food prices can cause fluctuations in inflation readings. Thus, economists often consider a modified indicator - the so-called "core" CPI - which factors out these costs. This figure was down to a yearly rate of 4% in October, lower than the 4.1% noted in September. October 2021 has witnessed the smallest 12-month change since September 2021, according to the Bureau of Labor Statistics.
The game should be recommenced
The game should be restarted.
Shelter, the most expensive item for households, is responsible for more than 70% of the rise in the basic CPI compared to last year. The rate of inflation in housing decreased in October to 6.7% in comparison to the same period in 2023 when it had reached its highest at 8%. This was viewed as the most positive part of the October report with the expectation that it will decrease further in the upcoming months. While this is a step in the right direction, there is still a long way to go to reach a degree of comfort, according to Zandi.
Despite food inflation being a "small blemish" in October, grocery prices had risen 0.3% on a month-to-month basis, a raise from 0.1% in September. However, when compared to October 2020, "food at home" inflation posted an increase of 2.1%, which is quite a step down from the high of over 13% it had hit in August 2022. Other noteworthy increases over the past year as reported by the BLS include motor vehicle insurance (up 19.2%), recreation (3.2%), personal care (6%) and household furnishings and operations (1.7%).
Globally, inflationary pressures that have been felt are the result of an imbalance between supply and demand. Energy prices surged in the start of 2022 in the aftermath of Russia's actions in Ukraine. When the U.S. economy began to recover from the Covid-19 pandemic, supply chains were disturbed, causing the cost of goods to increase. Additionally, with people receiving government payouts and being stuck at home, they started to spend more money than usual. Additionally, wages rose at a quicker rate than before, which caused business' labor expenses to go up.
Economists indicated that the pressures have been mostly alleviated. Supply systems have returned to their usual state and the labor market has cooled. In addition, the Federal Reserve has increased interest rates to their highest level since the early 2000s for the purpose of slowing down the economy. This strategy causes borrowing to become more expensive for customers and businesses, which can help reduce inflation. Jerome Powell, the chair of the Fed, recently declared that the United States still needs to progress a long distance to reach the sustainable 2% inflation target projected for 2026.
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