It’s a week of the unexpected in the United States. After surprising gains for Democrats in the mid-term elections, the latest inflation numbers have thrown a googly too.
The US Core inflation cooled more than the forecast and eased to 7.7 per cent in October, from 8.2 per cent in September, according to a US Labor Department report published on Thursday.
Food costs went down and used-car prices fell by 2.4 per cent. The prices of petroleum products increased by 4 per cent whereas health insurance costs dropped by a record 4 per cent, Thursday’s figures showed.
Core prices advanced 6.3 per cent, going back from a 40-year high in September 2022.
What does it mean for the US economy?
The downward slide in core prices has made many in the US heave a sigh of relief, at least for now. Federal Reserves chairperson Jerome Powell had said earlier this month that officials need to see a consistent pattern of weaker monthly inflation, indicating interest rates may peak higher than previously forecasted.
WATCH | US attempts to tackle 40-year-high inflation; hike in interest rate expected on Wednesday
Inflation and the larger performance of the US economy played a less-than-expected role in Tuesday’s midterm elections. Social issues still trumped economic performance.
A report in Bloomberg says that the US labour market and consumer demand remain largely resilient despite an aggressive tightening campaign by the Feds.
Inflation is affecting economies worldwide, in part due to the Russia-Ukraine war. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024, which many fear may stoke recession amid the current global outlook foreshadowed by conflicts and widespread unemployment.
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