The October inflation report likely shows that consumer prices have increased again

A high-stakes inflation report due Thursday is expected to show the fight to wrestle stubbornly high consumer prices under control has a long way to go.

The Department of Labor has released the highly anticipated consumer price index (CPI) report Thursday morning, providing a fresh look at how hot inflation ran in October.

Economists expect the gauge, which measures a basket of goods, including gasoline, health care, groceries and rent, to show that prices rose 0.6% from the previous month – up from a reading of 0.4% in September. On an annual basis, projected inflation has increased by 8%.

The report is likely to show underlying momentum in inflation as home prices and rents rise. Core prices, which exclude the more volatile measurements of food and energy, are expected to rise 0.5% from the previous month and 6.5% from the same time last year.

The FED’s war against inflation could cost 1 million jobs

Federal Reserve Chairman Jerome Powell

US Federal Reserve Chairman Jerome Powell speaks at a news conference on interest rates, the economy and monetary policy actions at the Federal Reserve Building in Washington, DC June 15, 2022. (Olivier Douliery/AFP via Getty Images/Getty Images)

While consumers have recently gotten a little relief from inflation in the form of lower gas prices, the latest CPI report will likely show that food and rent costs have skyrocketed. It is a development due to the higher cost of housing and food affecting directly and acutely household budget.

“It is not only the rate of increase that is troubling but the spread of price increases in various categories of spending that is affecting household budgets,” he said. Greg McBride, chief financial analyst at Bankrate.

The report will also have significant implications for Federal Reservewhich is tightening monetary policy at the fastest rate in decades as it tries to cool consumer demand and reduce out-of-control inflation.

Policymakers in October approved a fourth consecutive rate increase of 75, lifting the federal funds rate to a range of 3.75% to 4% – also to a tight level – and hinting that more increases are to come.

Wall Street’s growing expectation is that the Fed will trigger an economic downturn as it raises interest rates at the fastest pace in three decades to catch up with runaway inflation.

“The chances of a soft landing are likely to diminish until policy needs to be tightened or tightened longer,” Fed Chairman Jerome Powell said last month. “However, we are committed to getting inflation back down to 2%. We think failure to restore price stability will mean much greater pain.”

If the October inflation data comes in hotter than expected, it can raise the odds of an even steeper rate hike when the Fed meets in December and the central bank is more aggressive in the coming months.

“Despite half a dozen interest rate hikes by the Federal Reserve, any broad-based easing, significant and sustained inflationary pressure remains elusive,” said McBride. “As a result, Fed Chair Jerome Powell said there is a ‘way to open’ in hiking interest rates to a level that dampens demand enough to corral inflation.”

US inflation

A customer shops at a supermarket in Millbrae, California, on August 10, 2022. (Li Jianguo/Xinhua via Getty Images/Getty Images)

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The Fed is also looking at other economic indicators, including job growth and consumer inflation expectations. In a potentially worrying sign, job growth is rising at a healthy pace, despite central bank efforts to cool the labor market.

“We still have a ways to go,” Chairman Jerome Powell told reporters last week. “And the incoming data from our last meeting indicates that the final level of interest rates will be higher than previously expected.”

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