US inflation ticked higher in October, led by monthly gains in shelter, a reminder that the last lap in the Federal Reserve's marathon to bring inflation to its long-term target remains a challenge.
The consumer price index (CPI) accelerated to an annual 2.6pc in October, in line with analysts' forecasts in a survey by Trading Economics, from 2.4pc in September, which was the lowest since February 2021, the Labor Department reported today. Core inflation, which strips out volatile food and energy prices, rose at a 3.3pc rate, unchanged on the month.
The energy index contracted by 4.9pc over the 12 months, slowing from a decline of 6.8pc through September. The gasoline index fell by 12.2pc, slowing from a 15.3pc decrease the prior month. The fuel oil index fell by 20.8pc.
Federal Reserve policymakers last week cut the target rate by a quarter point, following a half-point cut in September that kicked off an easing cycle from then-23-year highs. Inflation has slowed to near the Fed's 2pc target from highs above 9pc in mid-2022 that proved to be a major impetus behind president-elect Donald Trump's victory at the ballot box on 5 November.
The CME's FedWatch tool today gives near-80pc odds of another quarter-point cut in December.
"The economy can develop in a way that would cause us to go faster or slower" in adjusting rates lower, Fed chair Jerome Powell told reporters last week after the Fed decision.
The food index rose by an annual 2.1pc, slowing from a 2.3pc gain through September. Shelter rose by an annual 4.9pc, unchanged. Transportation services rose by 8.2pc. New vehicles fell by 1.3pc while used vehicle prices fell by 3.4pc. Services less energy services, viewed as core services, rose by 4.8pc.
On a monthly basis, CPI rose by 0.2pc in October, a fourth month of such gains after falling by 0.1pc in June. Core inflation rose by 0.3pc for a third month.
Shelter accelerated to a 0.4pc monthly gain, accounting for over half of the monthly all-items increase, after a 0.2pc gain.
Energy was unchanged in October after falling by 1.9pc in September from the prior month. Food rose by 0.2pc on the month, following a 0.4pc gain.
