Inflation cools but remains near 40-year high

Consumer prices rose 7.7% in the year ending in October, but that was a significant drop from the 8.2% inflation rate. a month before and below 8% for the first time since February.

The report outperformed the expectations of economists, who had predicted an increase in the CPI around 7.9%.

On a monthly basis, the consumer price index increased at a rate of 0.4%, rising at the same pace that it underwent in September, said the Bureau of Labor Statistics on Thursday.

While inflation year-over-year slowed down, it remains close to 40-year high, defying a string of aggressive rate hikes from the Federal Reserve aimed at bringing inflation down to normal levels.

Shelter prices, which include the cost of renting and owning a home, accounted for more than half of the monthly increase in consumer prices, the Bureau of Labor Statistics said. Food and gas prices also contributed to the monthly rise.

PHOTO: Federal Reserve Chairman Jerome Powell holds a news conference in Washington, Nov. 2.  2022.

Federal Reserve Chairman Jerome Powell holds a news conference in Washington, November 2, 2022.

Elizabeth Frantz/Reuters

“Today’s report shows that we are making progress in reducing inflation, without giving up all the progress we have made in economic growth and job creation,” President Joe Biden said in a statement Thursday.

“My economic plan is showing results, and the American people can see that we are facing global economic challenges from a position of strength,” he added.

The Fed last week raised its short-term borrowing rate by another 0.75%, marking the latest in a string of jumbo measures. increased borrowing costs imposed by the Fed in recent months as it tries to reduce price increases by cooling the economy and curbing demand.

approach, however, risks tipping the US into a recession and put millions out of work.

The data release came two days later midterm electionsWhen Democrats outperformed the forecast of a voter backlash against the party in control of Congress and the White House is expected in part due to frustration over sky-high consumer prices.

A poll released the day before the election found that 80% of likely voters considered the economy to be the top issue in their vote for Congress; while 77% said the same about special inflation, one ABC News/Washington Post survey found.

Still, the Republican wave election did not materialize. As of Thursday, control of the House of Representatives and the Senate had not been determined.

Despite persistent inflation, growing evidence suggests that the Fed’s rate hikes have put the brakes on some economic activity.

mortgage rates reach a 20-year high last month, as the US faced an ongoing slowdown in home sales and housing construction.

Employment growth has been strong at a strong pace but has shown signs of moderation.

PHOTO: Federal Reserve Chairman Jerome Powell holds a news conference in Washington, Nov. 2.  2022.

Federal Reserve Chairman Jerome Powell holds a news conference in Washington, November 2, 2022.

Elizabeth Frantz/Reuters

United States added 261,000 jobs in October, exceeding the expectations of economists and demonstrating the continued strength of the labor market.

But hiring in October fell below the usual rate of jobs added in the previous month in 2022. Monthly job growth averaged 407,000 through 2022 compared to 562,000 per month in 2021, employment data showed.

While some data points to an economic slowdown, a government report released last month showed significant economic growth over the three months ending in September.

US gross domestic product grow 2.6% during that period; In contrast, economic activity shrank by a combined 2.2% in the first six months of the year.

Inflation, however, remains a top concern for federal policymakers.

When faced with high inflation, policymakers fear what is called a wage-price spiral, where rising prices cause workers to demand raises that help them afford goods, which in turn raises prices, leading to a self-perpetuating cycle. inflation.

However, October’s employment data is the latest to ease such concerns. Average hourly earnings increased by 4.7% over the past year, well below the rate of inflation and the drop from the 5% year-over-year wage growth in the previous month.

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