Please ensure Javascript is enabled for purposes of website accessibility
US Consumer Inflation Eased to 7.7% Over Past 12 Months
gvw_ap_news
By Associated Press
Published 1 year ago on
November 10, 2022

Share

Price increases moderated in the United States last month in the latest sign that the inflation pressures that have gripped the nation might be easing as the economy slows and consumers grow more cautious.

Consumer inflation reached 7.7% in October from a year earlier and 0.4% from September, the government said Thursday. The year-over-year increase, a slowdown from 8.2% in September, was the smallest rise since January. A separate gauge called core inflation, which excludes volatile food and energy, rose 6.3% in the past 12 months and 0.3% from September.

The numbers were all lower than economists had expected.

Helping drive the inflation slowdown from September to October were used car prices, which dropped for a fourth straight month. Also down were the prices of clothing and medical care. Food price increases slowed. By contrast, energy prices rebounded in October after having declined in August and September.

Even with last month’s tentative easing of inflation, the Federal Reserve is widely expected to keep raising interest rates to try to stem persistently high price increases. But Thursday’s better-than-expected data raised the possibility that the Fed could decide to slow its rate hikes — a prospect that sent stock prices jumping immediately after the government issued the figures.

“We expect this to mark the start of a much longer disinflationary trend that we think will convince the Fed to halt its (hikes) early next year,” said Paul Ashworth, chief North American economist at Capital Economics, a consulting firm. “With supply shortages normalizing, deflationary pressure is now finally showing up.”

Many economists have warned that in continuing to tighten credit, the central bank is likely to cause a recession by next year. So far this year, the Fed has raised its benchmark interest rate six times in sizable increments, heightening the risk that prohibitively high borrowing rates — for mortgages, auto purchases and other high-cost expenses — will tip the world’s largest economy into recession.

Some economists suggested that the latest inflation data shows that the hikes are beginning to achieve their goal, though the Fed needs to see further evidence.

“The data will be welcome news for the (Fed), finally showing some response in prices” to the rate increases, said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

In the midterm elections that ended Tuesday, roughly half of voters cited inflation as the top factor in their decisions, according to VoteCast, an extensive survey of more than 94,000 voters nationwide conducted for The Associated Press by NORC at the University of Chicago. About 8 in 10 said the economy was in bad shape, and a slim majority blamed President Joe Biden’s policies for worsening inflation. Just under half said factors beyond Biden’s control, such as Russia’s invasion of Ukraine, were to blame.

Those economic anxieties contributed to the loss of Democratic seats in the House of Representatives, though Republicans failed to score the huge political gains that many had expected. And a sizable chunk of voters — 44%, according to VoteCast — said their top concern was the future of democracy, an issue that was emphasized by Biden and Democratic congressional candidates.

Even before the release of Thursday’s figures, inflation by some measures had begun to ease and could continue to do so in coming months. Most gauges of workers’ wages, for example, show that the robust pay increases of the past 18 months have leveled off and have begun to fall. Though worker pay is not a primary driver of higher prices, it can compound inflationary pressures if companies offset their higher labor costs by charging their customers more.

Except for automakers, which are still struggling to acquire the computer chips they need, supply chain disruptions have largely unsnarled. Shipping costs have dropped back to pre-pandemic levels. The backup of cargo ships off the port of Los Angeles and Long Beach has been cleared.

And as declines in new rents that have emerged in real-time measures from such sources as ApartmentList and Zillow begin to be captured in the government’s forthcoming measures, that factor should also reduce inflation.

Even as many fear that the economy will fall into recession next year, the nation’s job market has remained resilient. Employers have added a healthy average of 407,000 jobs a month, and the unemployment rate is just 3.7%, close to a half-century low. Job openings are still at historically high levels.

But the Fed’s rate hikes have inflicted severe damage on the American housing market. The average rate on a 30-year fixed mortgage has more than doubled over the past year and topped 7% this week. As a result, investment in housing collapsed in the July-September quarter, falling at a 26% annual rate.

Higher mortgage rates have depressed sales. Home prices are slowing sharply compared with a year ago and have begun to fall on a monthly basis. The cost of a new apartment lease is also declining.

RELATED TOPICS:

DON'T MISS

When Newsom Gives His State of the State, He Should Be Candid About California’s Economy

DON'T MISS

CA Insurance Market ‘in Chaos,’ Says Former Insurance Commissioner. Can Lara Fix It?

DON'T MISS

Stock Market Today: S&P 500 Sets a Record After Wall Streets Breaks Out of Its Lull

DON'T MISS

California Wants to Pay Doctors More Money to See Medicaid Patients

DON'T MISS

Federal Reserve Still Foresees 3 Rate Cuts This Year but Envisions Fewer Cuts in Future

DON'T MISS

US Drops in World Happiness Rankings as Those Under 30 Report Declining Well-Being

DON'T MISS

Top Former US Generals Say Failures of Biden Administration in Planning Drove Chaotic Fall of Kabul

DON'T MISS

US Defense Chief Vows Continued Aid to Ukraine, Even as Congress Is Stalled on Funding Bill

DON'T MISS

‘Gorilla Hail’ as Big as Softballs Hits Parts of Kansas and Missouri

DON'T MISS

Time for a Change: 66% of Americans Want to End Daylight Saving Time Ritual

No data was found

Facebook News Tab Will Soon Be Unavailable as Meta Scales Back News and Political Content

15 hours ago

Stock Market Today: Wall Street Rises to More Records to Close Out Its Latest Winning Month

15 hours ago

A Fresno County First: Kerman Council Passes Amended Gaza Cease-Fire Resolution

15 hours ago

UN Top Court Orders Israel to Open More Land Crossings for Aid into Gaza

15 hours ago

How Involved Is Southern California Consulting Firm in FUSD Executive Dealings?

16 hours ago

Biden’s Fundraiser with Obama and Clinton Nets a Record $25 Million, His Campaign Says

16 hours ago

Fresno Unified’s Self-Protection Racket Is Hurting Our Kids

16 hours ago

Rockin’ Out or Laughing, the Valley Has Its Pick of Weekend Events

17 hours ago

Ex-Correctional Officer at Women’s Prison in California Sentenced for Sexually Abusing Inmates

19 hours ago

Caitlin Clark and Iowa Draw Nearly 5 Million Viewers for Second-Round NCAA Win

20 hours ago

PGA HOPE at Riverside Golf Course Introduces Military Veterans to the Game

PGA HOPE, now underway at Fresno’s Riverside Golf Course, is designed to introduce golf to veterans and active duty military members t...

13 hours ago

PGA HOPE at Fresno's Riverside Golf Course
13 hours ago

PGA HOPE at Riverside Golf Course Introduces Military Veterans to the Game

14 hours ago

Cronenworth’s Big Hit Helps Lift the Padres to a 6-4 Win Over Melvin’s Giants

15 hours ago

Shohei Ohtani Reaches 3 Times in Home Debut as the Dodgers Rout the Cardinals 7-1

15 hours ago

Facebook News Tab Will Soon Be Unavailable as Meta Scales Back News and Political Content

15 hours ago

Stock Market Today: Wall Street Rises to More Records to Close Out Its Latest Winning Month

15 hours ago

A Fresno County First: Kerman Council Passes Amended Gaza Cease-Fire Resolution

15 hours ago

UN Top Court Orders Israel to Open More Land Crossings for Aid into Gaza

16 hours ago

How Involved Is Southern California Consulting Firm in FUSD Executive Dealings?

MENU

CONNECT WITH US

Search

Send this to a friend