By Gwynn Guilford and Andreas Plecko
WASHINGTON (Dow Jones) — High inflation in the US eased more than expected in October. As the US Department of Labor announced, consumer prices rose by 0.4 percent compared to the previous month and were 7.7 (previous month: 8.2) percent above the level of the same month last year. Economists polled by Dow Jones Newswires had expected monthly inflation of 0.6 percent and annual inflation of 7.9 percent.
Core consumer prices (excluding energy and food) rose by 0.3 percent on a monthly basis and by 6.3 (6.6) percent on a yearly basis. The economists surveyed had expected rates of 0.5 and 6.5 percent.
The Fed raised interest rates by 75 basis points last week – the sixth hike this year – bringing it within a range of 3.75 to 4.00 percent. Fed Chair Jerome Powell signaled that the Fed will continue to hike rates, possibly in smaller increments but to higher levels than previously expected, raising the risk of a recession.
Inflation has skyrocketed over the past year as the US economy recovered from the pandemic. Strong consumer spending – fueled by very low interest rates and government stimulus measures – collided with stretched supply chains and pandemic-related shortages. Russia’s war in Ukraine has further fueled global inflation and pushed up the prices of food, energy and other commodities.
The main reason inflation has been so persistent is that it has progressively spread from goods to services such as housing, medical care and auto insurance, where inflationary momentum is slow to reverse once it gets going.
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(END) Dow Jones Newswires
November 10, 2022 08:37 ET (13:37 GMT)