On Tuesday morning, the U.S. government is set to unveil its latest consumer price report, and experts anticipate that it will reveal a continuing deceleration in inflation. According to a survey conducted by Dow Jones Newswires and The Wall Street Journal, analysts predict that the forthcoming report from the Bureau of Labor Statistics will show a 0.1% increase in prices from September, marking a 3.3% rise from October 2022.
The projections for core prices, excluding the volatility of food and energy prices, are even more conservative, with expectations of a 0.3% rise from September and a 4.1% increase from October 2022. In the prior month, September, overall prices showed a 0.2% month-on-month increase and a 3.7% rise year-on-year.
This report carries significant weight as it will heavily influence the Federal Reserve's forthcoming decision on interest rates. The Fed's last meeting of the year is scheduled for December 12-13. According to data from the options market's CME Group's FedWatch tool, it is predicted that the Fed will maintain interest rates within a range of 5.25% to 5.5%. The central bank had previously refrained from altering rates in both September and October, following a series of notable rate hikes throughout 2022 and early this year.
Chief economist at Ernst & Young, Gregory Daco, suggested in a recent analysis that overall prices might slightly decrease in September-October compared to the previous month. This potential decrease is attributed to a substantial decline in gasoline prices, counteracting the modest 0.3% increase in core CPI (excluding food and energy) due to a noteworthy 3% plunge in energy prices caused by the plummet in gasoline prices.
Federal Reserve Chairman Jerome Powell and other officials have expressed contentment with the progress in curbing inflation. While U.S. inflation reached a peak of 9.1% annually in June 2022, the pace has notably slowed. However, it still remains notably above the Fed's targeted level of 2%.
