WASHINGTON - U.S. consumer prices jumped by the most in seven months in October, which together with abating fears of a recession, support the Federal Reserve’s signal for no further interest rate cuts in the near term.
The U.S. central bank last month cut rates for the third time this year and signaled a pause in the easing cycle that started in July when it reduced borrowing costs for the first time since 2008. That stance was reiterated by Fed Chair Jerome Powell in prepared testimony to lawmakers on Wednesday. Excluding the volatile food and energy components, the CPI rose 0.2% after edging up 0.1% in September. The increase in the so-called core CPI was limited by the retreat in rents, which blunted somewhat the surge in healthcare costs and prices of used cars and trucks and recreation.The Fed tracks the core personal consumption expenditures price index for its 2.0% inflation target. The core PCE price index rose 1.
Last month’s jump in healthcare costs suggest an uptick in the core PCE price index last month. October producer price data due to be published on Thursday will shed more light on the core PCE price index, which will be released later this month. Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, climbed 0.2% in October after rising 0.3% in September. Other shelter categories also softened last month.
“Fed officials should go to the doctor if they think there is no inflation in the economy,” said Chris Rupkey, chief economist at MUFG in New York.Used motor vehicles and trucks prices increased 1.3% after decreasing 1.6% in September. The cost of recreation surged 0.7%, the largest increase since February 1996. Consumers also paid more for personal care products.
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Source: CNBC - 🏆 12. / 72 Read more »