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United States Inflation October 2023

United States: Inflation falls to lowest level since July in October

Inflation came in at 3.2% in October, down from September’s 3.7% and undershooting market expectations. October’s reading represented the weakest inflation rate since July, but was still above the Fed’s 2% target. The result was driven by moderating price pressures for housing and food. Moreover, prices for energy dropped.

In addition, the trend pointed down, with annual average inflation coming in at 4.7% in October (September: 5.1%). Meanwhile, core inflation edged down to 4.0% in October, from the previous month’s 4.1%.

Finally, consumer prices rose 0.04% in October over the previous month, after the 0.40% increase recorded in September and also undershooting market expectations. October’s result marked the weakest reading since July 2022.

The reading should encourage the Fed to stay on hold at its last meeting of the year in mid-December, as predicted by the vast majority of our panelists.

On the monetary policy implications, Desjardins’ Francis Généreux said:

“[The] drop in headline inflation and slight decline in core inflation are good news that will reassure Fed officials that they made the right call by holding rates steady at their recent meetings. But inflationary pressures will need to continue to ease up. If they do, the Fed’s next moves could be rate cuts—but probably not until next summer.”

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