SFS Insights: October CPI (Consumer Price Index) Unchanged
- Headline consumer prices in October were unchanged month over month, pulling the annual rate of inflation down to 3.2% from 3.7% last month.
- Core inflation rose 0.2% from a month ago as housing costs, insurance, and medical care increased in October.
- Hotel prices fell in October, likely on the heels of declining demand for travel.
- Air fares fell in October as fuel costs declined and competition among airlines put downward pressure on tickets.
- The annual rate of core inflation, which excludes food & energy, decelerated to 4%, the smallest rate since mid-2021 and should keep the Federal Reserve (Fed) from raising interest rates at next month’s meeting. Despite the deceleration, the Fed will likely continue to speak hawkishly (favoring aggressive monetary policy that favors higher interest rates in order to curb inflation) and will keep warning investors not to be complacent about the Fed’s resolve to get inflation down to its long-run 2% target.
- Stocks have historically performed well after a Fed pause due partly to receding interest rates. The S&P 500 Index has risen over the following 12 months after four of the last five pauses, generating an average gain of 16.4%.
