Consumer prices rose 0.2 percent in October and 2.6 percent over the previous 12 months as inflation slowly but surely returns to pre-pandemic norms, according to new Labor Department data released Wednesday.
Economists surveyed by the Wall Street Journal had expected the consumer price index (CPI) to rise 0.2 percent last month and 2.4 percent over the past year. Core CPI, which excludes more volatile food and energy prices, rose 0.3 percent last month.
The shelter index accounted for more than half of then overall monthly increase, rising 0.4 percent in October, according to the Labor Department. Shelter prices were up 4.9 percent year-over-year.
Pandemic-era federal stimulus and the roaring economic rebound sent prices skyrocketing as suppliers struggled to meet demand, pushing the CPI to its peak of 9.1 percent in June 2022.
While the Federal Reserve is not ready to declare victory over inflation just yet, the central bank started cutting interest rates in September after hiking them to a two-decade high to try to bring down inflation.
Fed Chair Jerome Powell told reporters last week after the central bank announced a second cut of 0.25 percentage points — following a 0.50 percent cut in September — that the “job’s not done on inflation” but it is on “a sustainable path” back to 2 percent.
The chairman also declined to “speculate” on the impact of President-elect Trump’s policy proposals on inflation, which economists expect could lead to higher inflation, deficits and interest rates.
Trump has proposed implementing tariffs of 10 to 20 percent on imports, and Republicans are gearing up to extend his 2017 tax cuts, further slash the corporate tax rate and weigh additional tax cuts including eliminating taxes on tips.
The president-elect has bucked criticisms of his economic agenda, insisting the experts are wrong and have consistently misjudged his policy proposals.
Powell told reporters last week that “we don’t we don’t guess, we don’t speculate and we don’t assume” when asked how the Fed may weigh the election results in upcoming policy decisions. The Federal Open Market Committee (FOMC) has one more monetary policy meeting before Trump is sworn in next year.
“We don’t know what the timing and substance of any policy changes will be. We therefore don’t know what the effects on the economy would be,” Powell said.
