CPI inflation October 2024:

Inflation rose in October, although roughly in line with Wall Street expectations, the Bureau of Labor Statistics reported Wednesday.

The consumer price index, which measures the costs of a spectrum of goods and services, rose 0.2% for the month. That brought the 12-month inflation rate to 2.6%, 0.2 percentage points higher than in September.

Both readings were in line with Dow Jones estimates.

Excluding food and energy, the move was even more pronounced. The core CPI accelerated by 0.3% in the month and stood at 3.3% annually, also meeting forecasts.

Stock market futures rose after the release, while Treasury yields fell.

Energy costs, which had been declining in recent months, remained stable in October, while the food index rose 0.2%. Year over year, energy was down 4.9%, while food was up 2.1%.

Despite signs of moderating inflation elsewhere, house prices continued to be an important contributor to CPI movement. The housing index, which has about a third weight in the broader index, rose another 0.4% in October, double the amount in September and up 4.9% on a year-over-year basis. The category was responsible for more than half of the increase in the CPI measure of all items, according to the BLS.

Used vehicle costs also increased, up 2.7% on the month, while motor vehicle insurance decreased 0.1%, but still rose 14% over the 12-month period. Airfares rose 3.2%, while eggs fell 6.4%, but were still 30.4% higher than a year ago.

Workers’ inflation-adjusted average hourly earnings rose 0.1% for the month and 1.4% from a year earlier, the BLS said in a separate report.

The readings pushed inflation further away from the Federal Reserve’s 2% target and could complicate the central bank’s monetary policy strategy going forward, particularly as a new administration takes over the White House in January.

“There are no surprises in the CPI, so for now the Federal Reserve should be on track to cut rates again in December. However, next year is a different story, given the uncertainty around potential tariffs and other Trump administration policies,” said Ellen Zentner, chief Fed economic strategist at Morgan Stanley Wealth Management. “Markets are already weighing the possibility that the Federal Reserve will make fewer cuts in 2025 than previously thought, and that they may hit the pause button as early as January.”

President-elect Donald Trump’s plans to implement more tariffs and government spending have the potential to boost growth and exacerbate inflation, which remains a substantial problem for American households despite having passed its meteoric peak in mid-2022.

Consequently, traders have lowered their expectations for future Fed rate cuts in recent days. The central bank has already cut 0.75 percentage points from its key borrowing rate and was expected to move aggressively.

However, traders now expect just another three-quarters of a point in cuts through the end of 2025, about half a point less than expected before the presidential election.