In October, inflation in the United States picked up, marking a 2.6% increase on an annual basis compared to September’s 2.4%. On a monthly basis, the Consumer Price Index (CPI) rose by 0.2%, maintaining a steady trend that aligns with analysts’ forecasts. The data, released by the Department of Labor, highlight a key point: core inflation — which excludes volatile categories like food and energy — held steady at 0.3% month-over-month and 3.3% year-over-year, in line with expectations.
The housing price index accounted for more than half of the monthly CPI increase, with a 0.4% rise in October alone and 4.9% year-over-year. Other categories also had notable impacts: used car prices jumped by 2.7%, and airline fares increased by 3.2%. Meanwhile, energy costs, after months of decline, remained stable, and food prices inched up by 0.2%.
What is the Fed’s Strategy for High Inflation?
Elevated inflation remains a primary concern for the Federal Reserve, which in recent months has slightly relaxed its monetary policy following a prolonged phase of interest rate hikes. Currently, rates are hovering between 4.50% and 4.75%, with an additional 0.25% cut anticipated in December. This easing aims to support economic growth without triggering a significant increase in unemployment, which, although at 4.1%, showed weaker job creation due to extraordinary factors like hurricanes and strikes.
The American economy overall continues to demonstrate resilience, with GDP growth reaching 2.8% in the third quarter — although below expectations — and unemployment remaining relatively low. However, future economic policies, influenced by the expectations tied to the new Trump administration, could bring greater uncertainty in 2025, potentially leading the Fed to revise its approach.
For more details on the CPI and its impact on your finances, check out our comprehensive guide: What is the CPI and How Does It Impact Your Finances: A Complete Guide.
For a full analysis of the current state of the U.S. economy, you can also visit the Federal Reserve’s official website.