The consumer price index was up 7.7 per cent from a year earlier, the smallest annual advance since the start of the year and down from 8.2 per cent in September, according to a Labor Department report Thursday. Core prices, which exclude food and energy and are regarded as a better underlying indicator of inflation, advanced 6.3 per cent, pulling back from a 40-year high in the prior month.
Treasury yields plunged while U.S. stock futures surged and the dollar index tumbled. Traders moved closer to pricing in a half-point Fed hike in December, rather than 75 basis points, and cut to below 5 per cent where they see the peak rate coming next year. Meantime, elevated inflation continues to weigh on American households and the broader economy. High prices have eaten away at wage gains and led many to either tighten their belts or rely on savings and credit cards to keep spending.
Inflation is affecting economies globally, spurring the world’s most aggressive and synchronized monetary policy tightening in 40 years and raising risks of a global downturn. Stripping out food, energy and shelter, the CPI dropped 0.1 per cent, the weakest reading since May 2020.Apparel fell 0.7 per cent, biggest decline since AprilHealth insurance decreased a record 4 per centUsed cars decreased 2.4 per cent, most since March
Economists generally expect goods prices to continue to soften as a result of shifting consumer preferences, improving supply chains and lower commodity prices. However, services may keep upward pressure on wages and inflation for the foreseeable future.“I don’t think prices are going to go down to pre-pandemic levels but we have seen pricing ease.” - Dara Khosrowshahi, CEO of Uber Technologies Inc.
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