US inflation falls to 3.2% in October Annual rise in consumer price index slows more than economists forecast

 Inflation eased further in October, but the Federal Reserve still hasn’t seen the kind of progress needed to let up on its fight to tame consumer prices and slow the economy.

Data from the Bureau of Labor Statistics Tuesday morning showed prices rose 3.2 percent over the year ending in October. That’s down from the 3.7 percent annual figure notched in September and August, but still above the 2 percent considered to be the normal rate. Compared to the prior month, prices in October were flat.

Put together, overall inflation looks much better than in 2022 when prices soared to 40-year highs and threatened the entire economy. But even now, prices for groceries, health care, car insurance, rent, and beyond are higher than before the pandemic started, weighing on peoples’ budgets and dragging down their perceptions of an otherwise strong economy.

And through it all, the Fed is pushing to root out remaining sources of inflation that haven’t responded to its aggressive moves. The central bank has pushed its baseline interest rate to between 5.25 and 5.5 percent, the highest level in 22 years, in the hope of controlling price increases.

“Last month didn’t have as much progress as we’d hoped,” said Diane Swonk, chief economist at KMPG. “We’re entering a period where it’s unclear how sticky inflation is going to actually be.”

Tuesday’s data from the consumer price index won’t drastically change the Fed’s plans moving forward. Officials have long said they need months of information — on prices, jobs, wages, spending, and more — to understand where the economy is headed.

Over the past few months, officials have held off on raising rates to gauge whether their policies are working or if they need to push even harder.

In a speech last week, Fed Chair Jerome H. Powell said the central bank wouldn’t hesitate to raise rates again if need be. In the meantime, officials will “move carefully” so they can balance “both the risk of being misled by a few good months of data and the risk of overtightening.”

“We know that ongoing progress toward our 2 percent goal is not assured,” Powell said. “Inflation has given us a few head-fakes.”

Prices are up across the board, but a few categories stick out. Gas and grocery costs continue to weigh on households nationwide. And for more than a year, housing has been a main driver of overall inflation. Rent costs, which make up a large share of the basket of goods used to calculate the consumer price index, have skyrocketed during the pandemic.

Policymakers are generally optimistic that rent costs will ease as roughly 1 million multifamily rental units come online later this year and next. Already costs for new leases have cooled off.

But it will take time for those differences to be reflected in official data. And some housing experts wonder how much rent will meaningfully stabilize when so many newly constructed homes skew toward the higher end of the market.

More broadly, though, the economy continues to shine. The economy grew like gangbusters between July and September. The labor market is slowing down but still clocked a 34th straight month of gains in October. Plus, the recession that seemed practically guaranteed one year ago has largely faded from economists’ forecasts.

In an analyst report last week, Goldman Sachs kept the odds of a recession over the next 12 months at just 15 percent, thanks to real disposable income growth, an expected boost in manufacturing, and the Fed’s ability, so far, to bring inflation down gradually without triggering a major downturn.

Still, while most Americans are financially better off than they were before the pandemic, many are still sour on the economy. Inflation is a major reason.

The frustration poses a huge political challenge to the White House, with just 30 percent of voters approving of Biden’s handling of the economy. That’s the lowest reading since he took office, according to a Washington Post-ABC News poll.

Yet economists puzzle over why people can feel so down but continue to spend big on vacations, concert tickets, and dining out. They’re expected to keep that momentum up through the holidays, keeping the economy churning into 2024.

At Weber’s Cider Mill Farm in Parkville, Md., heavy rain caused a bit less foot traffic this fall. But beyond that, shoppers haven’t stopped showing up, said Chief Operating Officer Stephanie Carstetter.

Supply chain snafus have also improved greatly since 2022, when the farm’s suppliers struggled to keep glass jars in stock, for example. But now, with enough planning ahead, Carstetter can depend on having enough of the basics — such as jars and plastic packaging — to keep the business running smoothly.

The market and cider mill tend to be busiest from mid-to-late-October, with kids and their families. But Carstetter said that even longtime, older shoppers who may have less wiggle room in their budgets have stayed loyal, too.

“They’re adjusting just like the rest of us,” she said.

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