The Bureau of Labor Statistics said Thursday that inflation was less than expected in October.
A broad range of goods and services are rising in price.
The consumer price index increased by 7.7% in October, the smallest 12-month increase in more than two years. The increase was expected to be 7.9% by economists. A basket of goods and services that cost $100 a year ago is now $107.70.
The annual rate is close to the highest level since the early 1980s, but it is down from a peak in June.
Andrew Hunter, senior U.S. economist at Capital Economics, said that October's reading was very high. It is a move in the correct direction.
The decline in the annual inflation rate doesn't mean prices fell for goods and services, it just means prices aren't rising as quickly
Consumers cut back on holiday gift buying due to higher inflation.
If inflation is speeding up or slowing down, the monthly change is a better indicator of near-term trends.
The BLS reported that the consumer price index rose from September to October. The economists expected a small increase.
Hunter said that over the past year, they have seen a lot of 0.4%, 0.5%, and 0.6%. It is the reason annual inflation has gone up so much.
He said that monthly readings in the range of 2%) would show that inflation was under control.
Inflation is a small part of a healthy economy. The Federal Reserve wants to keep inflation low.
After years of low inflation, prices began to rise quickly in early 2021.
As the U.S. economy reopened, a supply-demand imbalance fueled inflation that was initially limited to items like used cars, but which has lingered longer than expected.
The pervasiveness of inflation is the crux of the problem.
Voters were worried about inflation heading into the election. A recent NBC News poll found that 81% of respondents were either somewhat dissatisfied or very dissatisfied with the state of the economy.
A household in the U.S.Spends an average of $445 more a month to buy the same items it did a year ago according to an estimate from Moody's.
Wages haven't kept pace with inflation, meaning a loss of purchasing power. The BLS says that hourly earnings have fallen in the last year.
Despite some recent improvements, large and consistent price increases in food, energy and housing have been troubling.
He said that they are necessities that constitute a large share of household spending.
You need a roof over your head if you don't cook or heat the house. These high levels of inflation are being driven by three categories.
According to the most recent data from the U.S. Department of Labor, housing accounts for 34% of household spending in 2021, the most recent year for which figures are available. Both transportation and food are included in the cost of living.
Any meaningful relief for household budgets is something that is still well over the horizon.
According to the BLS, shelter prices increased in October, the largest monthly increase in that category since 1990. The category is growing.
The food at home index increased in October compared to a year ago. In August it was the largest 12-month increase in over 40 years.
The energy category includes gasoline, fuel oil, natural gas and electricity. That is a decrease from the previous month.
Any meaningful relief for household budgets is still a long way away.
Many Americans were upset by the high prices of gasoline. Prices at the pump have retreated from summer highs of more than $5 a gallon nationwide but have risen slightly in the past week.
Economists said that core inflation, which excludes food and energy costs, is important in predicting future inflation trends.
The measure shows how broad the inflation has become. The 12-month increase in core inflation was the largest in more than 30 years. In October, core inflation was up 6.3% over a year ago, while the index was up 0.6%.
According to the BLS, shelter was the main factor in the monthly increase of the coreCPI. It made up 40% of core inflation.
The current-day snapshot of the inflation rate isn't an accurate one, as it lags price dynamics in the broader housing market. The U.S. is in a housing recession according to some people.
Medical care, household furnishings and operations, new vehicles, and personal care are some of the things that have increased in the past year.
Shelter, motor vehicle insurance, recreation, new vehicles and personal care all contributed to monthly increases. Used cars and trucks, medical care, apparel, and airfares all declined in the month.
The chairman of the Federal Reserve said during a press conference last week that price pressures are still visible.
The central bank has raised borrowing costs in order to cool the economy. Powell said that policy would probably continue for a long time.
Powell said it was premature to talk about pausing interest rate increases. It isn't something that we're thinking about, that's really not a conversation to be had now
We have a lot of work to do.
Inflation isn't a problem in the U.S.
Consumers in the United Kingdom saw prices increase 10.1% in September, tying a 40-year high hit in July.
Inflation first appeared in the US, Hunter said. It's partly due to the fact that many states have restrictions on Covid related to the economic recovery.
The U.S. is a leading indicator of inflation in other countries.
Inflation is a global problem worsened by geopolitical factors such as the ongoing Russian invasion of Ukraine. Pictured: damage in Donetsk, Ukraine, on Nov. 5, 2022, after shelling.As the economy reopened, Americans had more disposable income because of federal funds and people wanting to stay in their homes. Global supply chains were roiled by Covid-19 lockdowns, which resulted in more cash running into fewer goods to purchase.
Hunter said that the supply-chain issues are only now beginning to be untangled. He said that higher labor costs and wages have led to upward pressure on the cost of services.
Hunter said that the surge in commodity prices was caused by the Russian invasion of Ukraine.
It becomes more costly to produce and transport goods due to high energy costs.
If we are lucky, this will likely take a long time to happen.
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