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U.S. price increases slowed last month, the latest sign that inflationary pressures gripping the nation may be easing as the economy slows and consumers become more cautious.
Consumer inflation rose 7.7 percent in October from a year earlier, the Labor Department said on Thursday, after rising 0.4 percent in September.
The year-on-year increase was the smallest since January. Excluding volatile food and energy prices, ‘core’ inflation It rose 6.3% over the past 12 months, up 0.3% from September.
Those numbers were lower than economists expected. US Federal Reserve Continued rate hikes are widely expected to try to stem the continued high price hikes.
However, many economists warn that while the aggressive tightening of credit continues, Fed likely to cause economic recession by next year.
The Fed has raised its benchmark interest rate six times in sizable increments so far this year, adding to prohibitively high borrowing rates — mortgages, car purchases and other high-cost outgoings — that would make the world’s largest The risk of the economy slipping into recession.
Inflation is pretty much the top concern for many voters in the midterm congressional elections that wrap up on Tuesday.
Their economic anxiety caused Democrats to lose seats in the House, even as Republicans failed to capture the huge political gains many expected. Even before Thursday’s data, inflation, as measured by some measures, had begun to moderate and is likely to continue to moderate. the next few months.
For example, most indicators of worker wages show that the strong wage growth of the past 18 months has leveled off and begun to decline.
While worker wages are not the main driver of price increases, if companies offset higher labor costs by charging customers more, it could exacerbate inflationary pressures.
Supply chain disruptions have been largely unaffected, with the exception of automakers still struggling to get the computer chips they need. Shipping costs have fallen to pre-pandemic levels.
Cargo reserve cargo ships at the ports of Los Angeles and Long Beach have been cleared. Factors should also bring down inflation as new rent declines emerging from real-time measures from sources like ApartmentList and Zillow begin to be reflected in upcoming government measures.
The country’s job market remains resilient despite fears by many of a recession next year. Employers added an average of 407,000 jobs a month, and the unemployment rate was just 3.7%, near a half-century low. Job openings remain at record highs. But the Fed’s rate hike wreaked havoc on the U.S. housing market.
The average rate on a 30-year fixed mortgage has more than doubled over the past year, to more than 7% before falling slightly last week.
As a result, housing investment plummeted in the July-September quarter, falling at an annual rate of 26%.
Higher mortgage rates dampened sales. Compared with a year ago, house prices have slowed sharply and started to fall month by month.
The cost of leasing new apartments is also falling. However, because of the way the government calculates the cost of housing, economists believe house prices may have surged in October, pushing up broader inflation measures.
The government measures the cost of all rents, including most rents under existing leases. However, rents for new leases are slowly falling.
Economists expect prices of many key commodities to fall. Used-car prices surged last year and are expected to decline from September to October as a shortage of computer chips has slashed the supply of new cars. Wholesale used car costs have steadily declined, but have yet to be fully factored into retail prices.
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