U.S. inflation inched up to 2.6% in October, rising from September’s 2.4% annual rate in an increase driven largely by persistent increases in shelter-related costs.
Wednesday’s Consumer Price Index report from the U.S. Labor Department finds the average costs of goods and services rose 0.2% on a monthly basis in October, matching the increases over each of the past three months. The price index for shelter rose 0.4% last month, accounting for over half of the over monthly increase in inflation. Shelter-related costs, computed by the Bureau of Labor Statistics utilizing data from new rents, existing lease agreements and a rent-equivalent calculation for owner properties, was up 4.9% on an annual basis in October.
Wednesday’s report is the first release of new federal inflation data since former President Donald Trump’s decisive victory in last week’s election, one that saw economic issues at or near the top of most voters’ lists of concerns.
Core inflation, a metric that strips out volatile food and energy prices, came in at 3.3% year-over-year in October, up 0.3% on a monthly basis, according to the report.
Grocery prices continued a trend of slowing price increases, up 0.1% from September to October and 1.1% more expensive than this time last year. Prices on food away from home saw a slightly higher monthly increase of 0.2% and the cost of eating out was 3.8% higher in October over the past 12 months.
Gasoline prices fell by 0.9% month-over-month in October and average pump prices were 12.2% lower than this time a year ago. The average price for a gallon of regular in Utah was $3.21 on Wednesday, down 25 cents from a month ago, according to data posted by AAA. Utah gas prices are running well north of the national average of $3.08 per gallon.
Mountain West states, which include Utah, had the lowest regional inflation in the country last month, with prices on goods and services up 1.3% in the last 12 months.
While CPI inflation moved up for the first time in seven months in October, most economists believe the downward trend over the past two years will resume, per a report from The Associated Press.
“Inflation is proving to be a little sticky, but not a big issue,” Ryan Sweet, chief U.S. economist at Oxford Economics, a consulting firm, told AP. “What I think that means for the Fed is that they can still cut in December.”
Inflation bump follows Fed cut
At its policy meeting last week, the Federal Reserve reduced its benchmark federal funds rate by .25%, following up on a 0.5% cut assessed at its last meeting in September.
The Fed, which is guided by its dual Congressional mandate of maintaining maximum employment alongside price stability, switched gears this fall as U.S. inflation eased closer to the body’s target of 2%, backing off the more restrictive monetary policy stance in an effort to bolster a slowing jobs market.
At a press conference last Thursday following the conclusion of its meeting, Federal Reserve Chairman Jerome Powell noted recent economic reporting reflects a positive U.S. economic climate, though one in which housing-related costs remain an outlier amid costs for other consumer goods and services that are increasing at a much lower rate since CPI inflation peaked at 9.1% in mid-2022.
“Recent indicators suggest that economic activity has continued to expand at a solid pace,” Powell said. “GDP rose at an annual rate of 2.8% in the third quarter, about the same pace as in the second quarter. Growth of consumer spending has remained resilient. In contrast, activity in the housing sector has been weak. In the labor market, conditions remain solid. Payroll jobs gains have slowed from earlier in the year, averaging 104,000 a month over the past three months. This figure would have been somewhat higher if not for the effect of labor strikes and hurricanes in October.”
While Powell was asked repeatedly at last week’s press conference to offer a weigh-in on how the U.S. economy and the Fed’s policy stance moving forward would be impacted by the outcome of the presidential election, the Fed chairman noted no policy changes have yet been made and refused to speculate about potential future actions by Trump’s incoming administration.
“In the near-term, the election will have no effects on our policy decisions,” Powell said. “Here, we don’t know what the timing and substance of any policy changes will be. We therefore don’t know what the effects on the economy will be. We don’t guess, we don’t speculate and we don’t assume.”