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October Sees Inflation Easing to 3.2% Annually Amidst Declining Gas Prices
Consumer prices
Consumer prices remained stable in October, bringing the annual inflation rate down to 3.2% from the previous **3.7% ** in September as energy prices receded, according to the Bureau of Labor Statistics.
Gasoline Index Plummets 5% Monthly, Offset by Rising Shelter Costs
The core consumer price index, excluding volatile food and energy costs, rose by 0.2%, below analysts’ expectations. The annual rate decreased to 4% from 4.1% in September, marking the smallest pace since September 2021.
Evidence
RSM US Chief Economist Joseph Brusuelas highlighted further evidence of disinflation, with month-over-month inflation at 3.2% and core inflation up 0.2% to 4%.
Reports
The report will be closely examined by market observers and Federal Reserve policymakers for insights into future inflation trends. Although various goods and services have cooled this year, the current inflation rate remains above the central bank’s 2% target.
The yield on the 10-year Treasury fell to 4.5%, and stocks were poised for a strong opening with Dow Industrial Average futures up by 300 points after the report’s release.
Question
The question remains whether inflation will continue to drop as the economy softens under higher interest rates or if a recession is necessary for a return to pre-pandemic inflation trends.
On Wednesday, the Census Bureau will release retail sales data for October, providing insight into consumer preparedness for the critical holiday season.
Goldman Sachs
Goldman Sachs believes the global economy, including the U.S., will perform better than expected, with a **15% ** chance of a U.S. recession. The firm estimates a 2.1% increase in the U.S. economy in 2024 and 1.9% in 2025.