Consumer prices rose 6.5% last month compared to a year ago, extending a monthslong slowdown of price hikes and bolstering hopes that the U.S. can avert a recession.
Year-over-year inflation has fallen for six consecutive months since it reached a peak of 9.1% in June. Despite the slowdown in price increases, inflation continues to hover near a 40-year high.
Economists had predicted a CPI increase of 6.7%.
[This will get lots of cheering from the media, and it *is* an improvement — but not by a lot. We’ve had negative month-on-month reports before too, and for the same reason: gas prices dropped. Rent and food inflation are still running hot, however, and there’s not a lot of evidence that we’re getting close to a regular 2% target level, perhaps not even in this year.
Stay tuned for the PCE index inflation rate, which will be out in a couple of weeks. That will give us a better idea of where the Fed’s at. — Ed]
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