Consumer prices rose 2.6% in October from a year ago, up slightly from the previous month and reversing some of the slowdown seen in recent months, according to data released Wednesday by the United States Bureau of Labor Statistics. The new report matched economists’ expectations.
The latest update offers a look at the price increases just over a week after the issue appeared to help former President Donald Trump win re-election. The data ended a six-month streak of slowing inflation.
Core inflation – a closely watched measure that does not take into account the volatility of food and energy prices – rose 3.3% in the year ending in October, the highest same level as the previous month, according to the data.
Food prices rose 2.1% in the year ending in October, a slower increase than the overall rate.
Prices have fallen over the past year for some common grocery items such as white bread, bacon and bananas. However, the price of eggs soared 30% from the previous year, mainly due to an outbreak of bird flu that decimated supply.
Gasoline prices offered a bright spot in Wednesday’s report, down more than 12% in the year ending in October. Gasoline prices typically decline in the final months of the calendar year as drivers reduce consumption after the peak summer season.
Overall, inflation has slowed significantly since peaking at 9% in 2022, now hovering near the Federal Reserve’s 2% target rate.
The slowdown in price increases coincided with robust economic growth, establishing the two conditions necessary for the United States to achieve a “soft landing.”
Still, Fed policymakers expect inflation to gradually decline toward normal levels next year and reach the central bank’s target rate in 2026, according to projections released in September.
The Fed cut interest rates by a quarter of a percentage point last week. The move comes two months after the Fed cut its benchmark interest rate by half a percentage point, reducing its fight against inflation since its launch in 2021.
The Fed is guided by a dual mandate: to keep inflation under control and to maximize employment. In theory, lower interest rates help stimulate economic activity and boost employment.
As central bank concerns about inflation have eased in recent months, a renewed focus on the labor market has come to the fore. Employment has continued to grow, but the expansion has slowed in recent months. The unemployment rate rose from 3.7% to 4.1% this year.
Federal Reserve Chairman Jerome Powell holds his monthly news conference November 7, 2024 in Washington, DC.
Kent Nishimura/Getty Images
“We remain convinced that with an appropriate recalibration of our policy, the strength of the economy and the labor market can be maintained with inflation falling sustainably to 2%,” declared the Chairman of the Fed, Jerome Powell, during from a press conference in Washington, DC. last week.
Even though inflation has slowed, that progress has not reversed a rise in prices that dates back to the pandemic. Since President Joe Biden took office in 2021, consumer prices have climbed more than 20%.
The price increases appeared to fuel support for Trump in last week’s election. More than two-thirds of voters believe the economy is in bad shape, according to preliminary results of an ABC News poll.
However, Trump’s proposals for higher tariffs and mass deportations of undocumented immigrants could reignite rapid price increases, some experts told ABC News.
A shopper picks up his package of bacon while purchasing groceries at a grocery store on August 14, 2024 in Rosemead, California.
Frédéric J. Brown/AFP via Getty Images
Asked last week about the Fed’s potential response to Trump’s policies, Powell said the central bank would make its decisions based on the impact of any policy changes on the economy.
“In the short term, the election will have no effect on our policy decisions,” Powell said Thursday. “We don’t know what the timing or substance of any policy changes will be. So we don’t know what the effects on the economy will be.”
“We don’t guess, we don’t speculate, and we don’t presume,” Powell added.
