US consumer inflation cooled more than expected last month, according to government data published on Tuesday (Nov 14), providing some welcome news for policymakers looking to control price increases without damaging the economy.

The consumer price index (CPI) inflation gauge increased by 3.2 per cent in the 12 months to October, down from 3.7 per cent a month earlier, the Labor Department said in a statement.

Inflation was unchanged month over month in October from September, with a sharp monthly decline noted in energy prices.

Both the annual and monthly figures came in below the median expectations of economists surveyed by MarketWatch.

While the decline in the gasoline index was responsible for the slowdown in prices, it was partially offset by a continued increase in the index for shelter, the Labor Department said.

While easing inflation is good news for consumers, the current rate of inflation as measured by a range of gauges remains stuck firmly above the Federal Reserve’s long-term target of 2 per cent.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The US central bank recently held its key lending rate at a 22-year high for a second consecutive meeting, leading some analysts and traders to predict it was done tightening monetary policy.

And Tuesday’s figures have reinforced that notion.

“October’s inflation data came in cooler than anticipated, and investors are breathing a sigh of relief knowing that this suggests the Federal Reserve may start to move from a hawkish monetary policy to a dovish stance through the end of the year and into 2024,” said Greg Bassuk, chief executive officer at AXS Investments in New York.

“It was definitely softer than consensus... some of the talk before the number itself was for the risk of a slightly stronger 0.3 per cent, and so the fact that it was meaningfully lower than that was enough to bring in some buying interest in bonds. I think it diminishes the probability the Fed hikes in December and makes the bar for them to tighten again pretty high,” said Ben Jeffery, interest rate strategist at BMO Capital Markets.

But a number of policymakers, including Fed chair Jerome Powell, have indicated that they are prepared to hike rates again, if necessary, to bring price increases firmly down to target.

Stripping out volatile food and energy segments, so-called “core inflation” cooled to 4 per cent last month, the smallest 12-month change since the period ending September 2021, the Labor Department said. AFP, reuters