United States Inflation

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United States: Inflation increases in October, gasoline prices up for first time in three months

November 17, 2015

In October, consumer prices increased 0.2% over the previous month in seasonally-adjusted terms, which contrasted the 0.2% decrease seen in September and marked a four-month high. The print was in line with market expectations and was mainly driven by the first increase in gasoline prices in three months. The positive result suggests that the economy has averted falling into a deflationary spiral and adds to the list of recent data that may encourage the Federal Reserve to lift interest rates at its upcoming meeting in December.

Inflation also rose 0.2%, which was up from September’s flat reading. Core consumer prices, which exclude food and energy prices, increased 0.2% in October, which matched the previous month’s reading. The figure was also in line with market expectations. Annual average core inflation in October held at September’s 1.8%.

Leslie Preston, Economist at Toronto-Dominion Bank, commented on the likely impact of the latest inflation data on the Fed’s interest rate policy:

“October's inflation numbers are just the sort of confirmation the Fed is looking for that domestic strength is generating inflationary pressures. For now, low energy prices and falling prices for many imported goods are keeping headline inflation incredibly benign, but that won't last forever. Monetary policy acts with a lag, and the Fed needs to hike rates before the inflation target is reached. The first rate hike is likely to come at the Fed's next meeting on Dec. 16th.”

FocusEconomics Consensus Forecast participants expect inflation to average 0.2% in 2015, which is unchanged from last month’s forecast. For 2016, the panel expects inflation to average 1.9%, which is also unchanged from last month’s estimate.

Author:, Economist

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United States Inflation Chart

USA Inflation October 2015

Note: Year-on-year and month-on-month variation of seasonally-adjusted consumer price index in %.
Source: Bureau of Labor Statistics.

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