The Consumer Price Index (CPI), which measures changes in prices paid by consumers for goods and services, was released earlier today for the month of October. The new CPI report showed an increase of 0.2% m/m and +2.6% y/y. The September report showed a m/m increase of 0.2% and a y/y change of +2.4%. One of the largest components, Shelter, which accounts for over 1/3 of CPI, has remained the most persistent component. Shelter increased 0.4% m/m and +4.9% y/y in October. There were some positives in October with Gasoline showing declines of 0.9% m/m and 12.2% y/y. Apparel was down 1.5% m/m but only up 0.3% y/y.
The table below shows m/m percentage changes in CPI indexes including all Items, Food, Energy in addition to the Core CPI, which excludes Food and Energy.
One of the two major focuses of the Federal Open Market Committee (FOMC) is price stability, which is still running above the target range of 2%. Per the Federal Reserve’s November 7th news release, members reemphasized their commitment to using the tools at their disposal to try and return inflation to the target. The FOMC’s next decision regarding fed fund rates will be announced on December, 17-18, 2024. The CPI summary for November is scheduled for release on December 11th, 2024.
We see this CPI release as continued evidence that inflation remains sticky but has made enough progress over the past year to warrant the Fed’s continued stance on reducing rates in the near term. We will get another non-farm payroll report and CPI release before the Fed’s next meeting. Current odds according the CME Fed watch indicate an 80% probability of another 25 bps cut.
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