CPI may have come down slightly in October says analysts, as goods prices have declined in the recent weeks, but as for the prices of services and rents, they are expected to continue to rise.
According to Dow Jones, economists anticipate that the consumer price index for October increased by 0.6% from September or 7.9% from a year ago, up from 0.4% or 8.2% annually in September. Core CPI without food and energy is anticipated to have increased by 0.5%, or 6.5% annually. This is less than September’s 0.6% growth, which was a 6.6% annual pace.
A crucial report for the Federal Reserve is the CPI, which will be announced on Thursday at 8:30 a.m. The Federal Reserve will meet in the middle of December and is widely anticipated to raise its fed funds target rate by a half percentage point.
Diane Swonk, chief economist at KPMG, stated that “we’re going from red hot to rolling boil, and that’s not cool enough for the Fed.” Policymakers should be confident enough in the report, according to Swonk, to hike interest rates by a half-point as planned. The Fed had been increasing rates in steps of 75 basis points. 0.01 of a percentage point is equivalent to one basis point.
“It appears that there is general agreement that the number will fall short of consensus. Everyone anticipates it to be less than these predicted figures, he said. “There is a lot of mixed movement among the various pricing ranges.”
Although used car prices are predicted to decline in the CPI data, housing costs and rent are still expected to increase.
We should begin to notice some of the price reductions that are occurring on major appliances that are tied to housing, according to Swonk. She anticipates more decreases in housing expenses as well as inflation in home-related commodities like furniture.
Although it won’t happen this month, she predicted that housing costs would moderate by the beginning of 2023. 40% of core CPI is made up of housing expenditures.
The senior U.S. economist at T. Rowe Price, Blerina Uruci, predicted that while core inflation could slow down, the October report will still seem hot.
