Inflation Up in October After Six-month Slowdown
The U.S. Bureau of Labor Statistics (BLS) reported that the consumer price index (CPI) rose 2.6% year over year in October, up from 2.4% in September. Although the month’s reading followed six consecutive months of slowing rates, it met economists’ predictions. The inflation increase won’t likely disrupt the Federal Reserve (Fed) as expectations are for another cut in interest rates next month.
The “core” CPI, which strips out the unpredictable food and energy components, increased 0.3% in October from September and 3.3% annually, matching projections. Shelter costs rose 0.4%, double its September move, accounting for one-third of the CPI. The BLS highlighted that the shelter index accounted for more than half the gain in the CPI reading despite overall inflation moderation. Furthermore, used vehicles rose 2.7%, and airline fares increased 3.2% during October.
Workers’ paychecks have steadily risen for the past three years to handle elevated prices; however, it’s not likely enough. A new PYMNTS Intelligence survey revealed that 62% of Americans currently live paycheck to paycheck, and the top reason for this was not earning enough. The real average hourly earnings rose 0.1% in October and 1.4% from one year ago.
What’s Next?
Inflation readings have slowly been moving toward the Fed’s 2% target but hit a slight bump in October. The Fed recently reduced its benchmark rate by 25 basis points to a new range of 4.5%-4.75% and is expected to continue to gradually lower interest rates for the rest of the year.
Inflation continues to apply financial pressures on Americans, and uncertainty remains with a new administration taking over the White House in January. Individuals should continue to monitor the economy and associated inflation trends, adjusting their financial habits accordingly. Employees should check with their managers for financial and mental wellness benefits and related resources.
We will keep you updated with any notable changes.
Article Published By: Zywave, Inc.
