United States: Inflation fell in October, from 8.2% to 7.7%

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United States: Inflation fell in October, from 8.2% to 7.7%

The forecast for analysts was 7.9%.

While inflation remains high, the pace of growth has moderated considerably in October in the United States.

Inflation finally seems to be slowing down in the United States, even if it remains at a very high level. It fell in October to its lowest level since January 2022, showing that the measures taken by the Federal Reserve (Fed) are starting to work.

Consumer prices rose by 7.7% in October compared to October 2021, according to the Consumer Price Index.

This is a much lower increase than the 8.2% increase recorded in September over one year. And it's also less than the 7.9% analysts were expecting, according to the Market Watch consensus.

In one month alone, prices rose 0.4%. This is the same increase as that recorded between August and September, and this is also a good surprise, since analysts were expecting an acceleration of +0.6%.

Housing accounts for more than half of this inflation, both for renting and for buying.

Real estate prices have soared during the pandemic, fueled by historically low rates and the remoteness of cities enabled by working from home.

The median price for a single-detached home rose 8.6% in the third quarter compared to the same period last year, according to data from the Association of Realtors (NAR), also released Thursday.

This slowdown could be a sign that the measures taken by the US central bank to contain inflation are finally starting to bear fruit.

It is indeed at the powerful Federal Reserve that has the daunting task of bringing price inflation back to around 2% year on year, a level considered healthy for the economy. However, it favors another measure of inflation, the PCE index, which remained stable in September and at +6.2% over one year.

The PCE index measures the change in the prices of goods and services purchased by individuals for personal consumption, excluding food and energy products.

To lower inflation, the Fed seeks to induce a voluntary slowdown in economic activity by raising interest rates, which should discourage household consumption and thus ease the pressure on prices.

The increase in the unemployment rate is seen as a gauge of the effectiveness of these measures.

This rate rose by 0.2 points to 3.7% in October, but job creation remained solid.

Taming inflation will take time, warned last week Fed Chairman Jerome Powell.

Faced with the persistence of inflation, the Fed announced on November 2 a further increase in its key rate, the sixth in a row. The latter, raised by 0.75 percentage points — a sharp rise — is now in a range of 3.75% to 4%, its highest level since January 2008.

Rising prices had become one of the main themes in the campaign for the midterm elections, which were held on Tuesday, and the final results of which were still not known on Thursday morning.< /p>

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