(Bloomberg) — US inflation probably moved sideways at best in October, highlighting the uneven path of easing price pressures in the home stretch toward the Federal Reserve’s target.
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The core consumer price index due on Wednesday, which excludes food and energy, likely rose at the same pace on both a monthly and annual basis compared to September’s readings.
The overall CPI probably increased 0.2% for a fourth month, while the year-over-year measure is projected to have accelerated for the first time since March.
“The October CPI report will likely support the notion that the last mile of inflation’s journey back to target will be the hardest,” Wells Fargo & Co. economists Sarah House and Aubrey Woessner wrote in a report. “Excluding the more volatile energy and food components, the unwinding of pandemic-era price distortions has proven to be frustratingly slow.”
They added that prices of core goods probably rose again in October, due in part to higher demand for cars and auto parts after Hurricanes Helene and Milton. Evacuation orders from the storms also forced more people to stay in hotels, continuing what’s been a “glacial slowing” in services prices.
What Bloomberg Economics Says:
“We expect both CPI and PPI to come in hot, pushing long-end rates even higher — and further restraining the economy over the next couple months. We expect control-group retail sales to slow and the unemployment rate to continue to climb, reaching 4.5% by year end,”
—Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou, Chris G. Collins, economists. For full analysis, click here.
Even so, “the story is very consistent, with inflation continuing to come down on a bumpy path,” and one or two bad reports won’t change that pattern, Fed Chair Jerome Powell said Thursday after the central bank cut interest rates by a quarter point.
The US government will also release wholesale inflation figures in the coming week, which probably picked up after stalling in September. Meantime, earnings growth that continues to outpace inflation likely contributed to another decent gain in retail sales, in data due Friday.
On Tuesday, Fed Governor Christopher Waller is due to speak at a banking conference before the central bank releases its latest Senior Loan Officer Opinion Survey. Powell is scheduled for an event later in the week, while New York Fed President John Williams and Dallas Fed President Lorie Logan are also on the calendar.
