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US consumer prices rise 0.4% in October, above forecasts

Hotter-than-expected inflation keeps pressure on the Federal Reserve to raise interest rates at its December meeting, affecting borrowing costs for businesses and households.

Photo: The National

What happened

US consumer prices rose 0.4% in October, a slowdown from the 0.6% increase in September but above the forecast of 0.3%. tradingeconomics.com+5 Core consumer prices, which exclude food and energy, rose 0.3%, above expectations of a 0.2% rise. tradingeconomics.com+3 Shelter costs climbed 0.3%, accounting for more than 30% of the overall increase. tradingeconomics.com Food prices rose 0.5%, and energy prices rose 0.7%, with gasoline up 1% and electricity up 0.9%. tradingeconomics.com Because of the government shutdown last year, the Bureau of Labor Statistics did not publish year-over-year inflation figures for October. tradingeconomics.com+3

Around it

Inflation is running well above the Federal Reserve's 2% target, and the US-Israeli war with Iran has boosted oil prices. The Economic Times The Fed left its benchmark overnight rate in the 3.75% to 4.00% range last month. The Economic Times Traders have largely priced in a 25 basis point rate increase at the Fed's final meeting of the year, with about 10% expecting a 50 basis point increase. The National+1 Annual consumer inflation was 3.7% in September, according to economists cited before the release. ZAWYA

What comes next

The Federal Reserve's final policy meeting of the year is in December, where a rate increase is widely expected. The National+2

Sources

  1. tradingeconomics.comUS Inflation Slows Down Less than Expected
  2. BusinessLineUS CPI inflation slows to 0.4% in October as energy prices ease
  3. The NationalHot US inflation report seals Federal Reserve rate increase
  4. Yahoo FinanceUS Consumer Prices Rise 0.4% in October, Exceeding Economists’ Forecasts
  5. economies.comThe Fed's inflation trap: Why slowing price growth may not be enough to prevent another rate hike
  6. The Economic TimesCPI report today: What is current US Fed interest rate? Will inflation data force US Fed to go for interest rate hike?
  7. ZAWYAUS consumer prices expected to have risen at slower pace in October

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