US Consumer Inflation Dropped To 7.7% Over Last Year.

(CTN NEWS) – The price increase in the United States moderated last month, a sign the consumer inflation pressures that have gripped the country might be easing.

The Labor Department reported Thursday that consumer inflation reached 7.7% in October from a year earlier and 0.4% in September.

In September, growth was 8.2%; the increase in October was the smallest since January. “Core” inflation, excluding volatile food and energy prices, rose 6.3% in the past 12 months and 0.3% in September.

All of the numbers were lower than economists expected.

Clothing, used cars, and medical care prices fell from September to October. The increase in food prices has slowed down. In contrast, energy prices rebounded last month after declining in August and September.

Despite last month’s tentative easing of inflation, the Federal Reserve is widely expected to continue raising interest rates.

However, Thursday’s better-than-expected data raised the prospect that the Fed could decide to slow its rate hikes – a prospect that sent stock prices soaring immediately after the government released the figures.

A recession will likely occur next year if the central bank continues tightening credit.

During this year alone, the Fed has raised its benchmark interest rate six times, heightening the likelihood that prohibitively high borrowing rates – for mortgages, auto purchases, and other high-cost expenses – will plunge the world’s largest economy into recession.

According to some economists, the latest consumer inflation data shows that the Fed’s rate hikes are beginning to have an effect.

“The data will be welcome news for the (Fed), finally showing some price responses to the rate hikes,” said Rubella Farooqi, chief U.S. economist at High-Frequency Economics.

Consumer Inflation was on many voters’ minds in the midterm congressional elections that ended Tuesday.

While Republicans failed to score the large political gains many had predicted, their economic anxieties contributed to the loss of Democratic seats in the House of Representatives.

Consumer Inflation had begun to ease before the latest figures were released, and it may continue to do so in the coming months.

According to most wage gauges, the robust wage growth of the past 18 months has levelled off and started to decline. Inflationary pressures can be compounded if companies charge a higher price to offset their higher labour costs.

Except for automakers still having trouble acquiring the computer chips they need, supply chain disruptions have largely been resolved.

Shipping costs have returned to pre-pandemic levels. We have cleared the backup of cargo ships off Los Angeles and Long Beach ports.

Additionally, the government’s forthcoming measures should capture the declines in new rents that have emerged in real-time from sources such as ApartmentList and Zillow.

The nation’s job market has remained resilient despite fears that the economy will enter recession next year.

A healthy average of 407,000 jobs are added by employers each month, and the unemployment rate is just 3.7%, close to a half-century low. There are still a lot of job openings.

As a result of the Fed’s rate hikes, the American housing market has been severely damaged. Over the past year, the average 30-year fixed mortgage rate has doubled, topping 7% before falling slightly last week.

This resulted in a 26% annual housing investment decline in the July-September quarter.

Sales have been depressed by higher mortgage rates. Home prices are falling monthly and have slowed sharply from a year ago. New apartment leases are also becoming more affordable.

Because of how the government calculates housing expenses, economists say prices rose in October and boosted inflation. The government measures all rents, including existing leases. New lease rents are falling.

Many crucial commodities should get cheaper, say experts. Used automobile prices, which surged last year due to computer chip shortages, should have declined from September to October.

Used-car wholesale prices have fallen steadily, but retail prices haven’t caught up.

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