Consumer prices rose 7.7% in the year to October, but this is a significant drop from the inflation rate of 8.2% the previous month and lower 8% for the first time since February.
The report beat the expectations of economists, who had predicted a rise in the CPI of around 7.9%.
On a monthly basis, the consumer price index rose at a rate of 0.4%, rising at the same pace it suffered in September, the Bureau of Labor Statistics reported Thursday.
Although year-on-year inflation slowed, it remained near a 40-year high, defying a series of aggressive rate hikes by the Federal Reserve aimed at bringing inflation back to normal levels.
Housing prices, which include the cost of rent and home ownership, contributed more than half of the monthly increase in consumer prices, the Bureau of Labor Statistics said. Food and gasoline prices also contributed to the monthly increase.
“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 Thursday. in a press release.
“My economic plan is working, and the American people can see that we face global economic challenges from a position of strength,” he added.
Last week, the Fed raised its short-term borrowing rate by 0.75%, marking the latest in a series of huge increases in borrowing costs imposed by the Fed in recent months as it tries reduce price increases by cooling the economy and stifling demand. .
This approach, however, risks tipping the United States into a recession and putting millions of people out of work.
The release of the data came two days after the midterm elections, when Democrats beat expectations of a voter backlash against the party controlling Congress and the White House, expected in part due to frustration over exorbitant consumer prices.
A poll released days before the election found that 80% of likely voters considered the economy a major issue when voting for Congress; while 77% said the same about inflation specifically, according to an ABC News/Washington Post survey.
Yet a Republican electoral wave did not materialize. As of Thursday, control of the House and Senate had yet to be determined.
Despite persistent inflation, mounting evidence suggests that the Fed’s rate hikes have dampened some economic activity.
Mortgage rates hit a 20-year high last month as the United States faces a continued slowdown in home sales and housing construction.
Employment growth held steady but showed signs of slowing.
The United States added 261,000 jobs in October, beating economists’ expectations and demonstrating the continued strength of the labor market.
But hiring in October fell well below typical jobs added in any given month in 2022. Monthly job growth has averaged 407,000 so far in 2022 from 562,000 per month in 2021, according to employment data.
While some data points to an economic slowdown, a government report released last month showed significant economic growth in the three months ending in September.
US gross domestic product grew 2.6% during this period; on the other hand, economic activity fell by 2.2% during the first six months of the year.
Inflation, however, remains a major concern for federal policymakers.
In the face of high inflation, policymakers fear what is known as a price-wage spiral, in which rising prices induce workers to demand increases that help them buy goods, which in turn pushes prices up, leading to a self-perpetuating boom cycle. inflation.
However, the October jobs data was the last to ease those concerns. Average hourly earnings rose 4.7% over the past year, well below the rate of inflation and a decline from 5% year-over-year wage growth the previous month .
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