US Disinflation Stalls, Highlighting Tough Road Ahead
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US inflation likely remained stagnant in October, highlighting the uneven pace of easing price pressures as the Federal Reserve aims to return inflation to its target, reports Bloomberg.
The core consumer price index (CPI), which excludes food and energy, is projected to have risen at the same pace on both a monthly and annual basis compared to September's readings.
The overall CPI is expected to have increased by 0.2% for the fourth consecutive month, while the year-over-year measure is projected to have accelerated for the first time since March.
"The October CPI report will likely support the notion that the last mile of inflation’s journey back to target will be the hardest," wrote Wells Fargo & Co. economists Sarah House and Aubrey Woessner in a report. "Excluding the more volatile energy and food components, the unwinding of pandemic-era price distortions has proven to be frustratingly slow."
The economists noted that core goods prices likely rose again in October, partially due to increased demand for cars and auto parts following Hurricanes Helene and Milton. Evacuation orders related to the storms also led to higher hotel occupancy, contributing to a "glacial slowing" in services prices.
Despite these challenges, Fed Chair Jerome Powell, speaking after the central bank cut interest rates by a quarter point on Thursday, maintained that "the story is very consistent, with inflation continuing to come down on a bumpy path," and that one or two unfavorable reports won't alter that trend.
The US government will release wholesale inflation figures this week, which are expected to have picked up after stalling in September. Additionally, data due on Friday suggests that robust earnings growth, outpacing inflation, likely contributed to a solid increase in retail sales.
Fed Governor Christopher Waller is scheduled to speak at a banking conference on Tuesday, followed by the release of the central bank's latest Senior Loan Officer Opinion Survey. Powell is also scheduled for an event later in the week, alongside New York Fed President John Williams and Dallas Fed President Lorie Logan.
Minneapolis Fed President Neel Kashkari stated on Sunday that the US economy has remained remarkably strong as the Fed tackles inflation, but acknowledged that the central bank is "not all the way home."