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October’s inflation report is ‘below expectations’
On a seasonally-adjusted basis, overall consumer prices remained the same in October, with the overall consumer price index (CPI) falling 3.2 percent year-over-year. NAFCU Economist Noah Yosif analyzed the data in a new Macro Data Flash report.
“The October consumer price index came in below expectations,” said Yosif. “Energy was unsurprisingly a drag on prices last month, but the deceleration was broad. Both new and used vehicle prices fell during the month, and overall goods inflation was negative for the fifth consecutive month. Service inflation has been more stubborn and was the driving force behind last month’s upside CPI surprise. But in October service price growth settled back into its pre-September range. With aggregate labor income slowing, there will be more confidence among Federal Reserve officials that price growth is on a sustainable path back to target.”
Core prices (excluding food and energy costs) rose 0.2 percent last month. Year-over-year core CPI growth was 4 percent. Energy prices decreased 2.5 percent during the month. From a year ago, energy prices were down 4.5 percent. Food prices rose 0.3 in October and were up 3.3 percent over the year.
“The FOMC is unlikely to provide much information on their inclinations until the December meeting, but the clear slowdown in the labor market combined with the return to a disinflationary path has many wondering when the next rate cut will come. NAFCU continues to believe that will happen in the second quarter, with an outside chance of March if unemployment continues to rise," Yosif concluded.
For more up-to-date economic insights from NAFCU's award-winning research team, view NAFCU’s Macro Data Flash reports.