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This Just In

October Inflation Rates Cooler than Expected; Decreases in Gasoline and Airfare Prices

Maddy Ryley, Managing Editor
October Inflation Rates Cooler than Expected; Decreases in Gasoline and Airfare Prices

CHICAGO — The U.S. Department of Labor’s Bureau of Labor Statistics’ Consumer Price Index (CPI) for October reported no change from September’s index, triggering optimism on Wall Street and in financial markets that the inflation threat is coming to an end.

While the CPI did not increase or decrease compared to September 2023, when comparing to October 2022, the all items index rose 3.2% before seasonal adjustment. The all items less food and energy index for October 2023 rose 4% when compared to October 2022, which is the smallest 12-month change since September 2021.

The 5% decrease in the gasoline index and 2.5% decrease in the energy index over the month offset the increases for other items, including shelter (0.3%), food (0.3%) and medical care services (0.3%). Airfares in October were slightly lower than the previous month, decreasing 0.9%, but down significantly from one year ago (-13.2%), according to the Bureau’s data.

The unemployment rate in October remained steady, coming in at 3.9% with job gains in government, social assistance and health care and declines in manufacturing due to strikes. The hourly earnings for employees on private, nonfarm payrolls rose by 0.2%, to $34, and average hourly earnings increased by 4.1% over the last 12 months, according to the Employment Situation for October.

Positive Market Reaction

According to NASDAQ, the flat rate of inflation led to bond yields going down and stocks, whose money is tied closely to interest rates, increasing on Nov. 14, when the CPI was released. It is reported that investors on Wall Street are “ready for what could become a massive end-of-year stock market rally.” The Dow Jones Industrial Average also soared by nearly 500 points, according to CNBC’s Nov. 14 report.

Dr. Peter Rupert, a Professor of Economics at the University of California at Santa Barbara who has spoken at Trade Show Executive’s Gold 100 and Fastest 50 Awards & Summit, said that the Federal Reserve’s interest rate increases have brought expectations to where it wants them and doubts the Fed will raise rates at its next meeting, which will be held Dec. 12-13.

Reach Peter Rupert at peter.rupert@ucsb.edu

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