On Tuesday, November 14th, The Bureau of Labor Statistics published the monthly and yearly data both on inflation and core inflation rates. In October 2023, the US economy showed signs of a broad slowdown, with core consumer prices, which exclude volatile items such as food and energy, rising by only 0.2% from the previous month. This was below market expectations of a 0.3% increase and a deceleration from the 0.3% increase in September.
The slowdown was evident in several sectors. Services less energy services decelerated to 0.3% from 0.6% in September, and commodities less food and energy commodities fell for the fifth consecutive period to -0.1% (-0.4% in September).
Meanwhile, the overall consumer price index (CPI) remained unchanged in October, despite market expectations of a 0.1% increase. The shelter index continued rising, albeit at a slower pace of 0.3% compared to 0.6% in September, offsetting a decline in the gasoline index (which fell by 5%).
The annual inflation rate also slowed to 3.2% in October from 3.7% in September and August, falling below market forecasts of 3.3%. Energy costs dropped by 4.5%, with significant declines in gasoline, utility gas service, and fuel oil. Prices increased at a softer pace for food, shelter, and new vehicles, and continued to decline for used cars and trucks. CPI did not change from the September figure (never been lower for 15 months). On the other hand, the annual core consumer price inflation rate edged down to an over two-year low of 4% in October, from 4.1% in the prior month. The shelter index, which accounts for over 70% of the total increase in all items less food and energy as said before, slowed to 6.7% from 7.2% in the prior month.
These figures suggest that the effect of the Federal Reserve’s aggressive tightening cycle may be passing through to the economy to a greater extent.