U.S. inflation showed little sign of breaking out in October despite strength in the economy and wages, likely keeping the Federal Reserve on its path of gradual interest-rate increases.
Excluding food and energy, the core consumer-price index rose 2.1 percent from a year earlier, according to a Labor Department report Wednesday, slightly short of the median estimate of economists for a 2.2 percent increase, which was also the gain in September. It was up 0.2 percent from the prior month, the fastest gain in three months and in line with projections.
Inflation is gradually gaining traction, with help from solid household demand and a tight job market, while the tariff war with China may further boost price pressures. At the same time, some of the latest advance reflected quirks such as a rebound in used-car prices, and the figures may potentially be seen as validating a recent decline in inflation expectations in financial markets, amid tumbles in crude oil and equities.
“These are pretty steady inflation prints,” with “nothing in here that argues inflation is going to overshoot,” said Omair Sharif, senior U.S. economist at Societe Generale. Also, there’s little to concern policy makers, so they’ll “continue to stay gradual” with interest-rate hikes, he said.
The biggest gain in energy prices since January boosted the broader consumer-price index, which rose 0.3 percent in October, matching estimates and following a 0.1 percent gain the prior month. It was up 2.5 percent from a year earlier, also in line with forecasts. The CPI report showed gasoline prices rose 3 percent from the prior month on a seasonally adjusted basis.