CPI report for October 2022: How high is the inflation in the US?
October’s inflation data has just been released with the headline being a further reduction after the drop in September.
Prices of goods in the US are up 7.7% compared to a year prior as the US Bureau of Labor Statistics published the data for October.
This represents a decrease from the inflation data from September. That was a 8.2% CPI increase, meaning October represents a 0.5% slowdown.
One of the big positives for average Americans will be the smallest year-on-year inflation increase for the food index since December 2021 at 0.6%. However, this is still a 12.4% increase on a year ago.
Compared to the rest of the G7, an organisation of seven of the world’s big economies, the US has the fourth worst inflation. However, inflation in the Eurozone and the UK is still on the rise while being far higher than that in the US while the States can boast of two months of inflation decreases. Optimistic expectations see the US having a 5.2% interest rate by the end of 2022.
This is all amongst the backdrop of multiple Federal Reserve interest rate increases, putting the cost of borrowing at the highest level since the 2008 banking crisis. How much this inflation slowdown can be attributed to this is unclear as interest rate rises typically affect businesses and inflation around a year after they are published.
There have been concerns that the Federal Reserve may have gone too far with its base interest rate rises. Though wielding this economic weapon is likely to bring down inflation it does so by forcing job losses and all round less spending. However, Federal Reserve chief Jerome Powell believes the Fed is doing its job in a sustainable way.
What has the president said about the latest inflation data?
President Joe Biden was quick to publish a statement on the latest data.
“Today’s report shows that we are making progress on bringing inflation down, without giving up all of the progress we have made on economic growth and job creation,” he said, “My economic plan is showing results, and the American people can see that we are facing global economic challenges from a position of strength.”