Consumer inflation continued to ease last month, in welcome news for US households and the Fed

Minneapolis  — US consumer price inflation cooled down in October after rising for the last two months. The moderation in inflation was even more than expected, sending US stocks sharply higher and providing a touch more solace to Americans who have dealt with painfully high prices the past two years.

The Consumer Price Index rose 3.2% for the 12 months that ended in October, down from 3.7% in September, according to Bureau of Labor Statistics data released Tuesday.

On a monthly basis, prices were unchanged for the first time since July 2022. A month before, they shot up 0.4% as gas and rent costs added upward pressure.

The Dow rose by 365 points or 1.1% on the news, with the S&P up 1.5% and the Nasdaq Composite higher by 2%.

Energy prices dropped in October; however, that was offset by the continued rise of shelter costs, according to the report.

“The continued moderation of inflation will help keep the Federal Reserve on the sidelines,” said Greg McBride, chief financial analyst at Bankrate, in a statement. “Any move in December seems highly unlikely, but stubbornly high core inflation will have the Fed keeping their options open into 2024.”

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Economists anticipated a 0.1% monthly increase and a 3.3% year-over-year gain, according to Refinitiv consensus estimates.

There also was positive news on the underlying inflation front.

Core CPI, which excludes the more volatile food and energy categories, climbed 0.2% monthly, bringing the annual increase to 4%, which is the lowest yearly increase since September 2021.

The index cooled from the prior month — when core CPI rose 0.2% monthly and 4.1% annually — and the October print also beat expectations for a 0.3% monthly increase and a 4.1% annual gain.

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