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According to market estimates, the U.S. Consumer Price Index, a major inflation indicator that the Federal Reserve monitors to fine-tune its interest regime, is expected to remain steady in October. The likely increase to 2.6 percent from 2.4 percent in September is seen as an encouraging sign for further easing of the interest rate, as it’s within the envelope of the Fed Reserve’s 2 percent target.
Falling gasoline prices may have contributed to the low price increase, although price pressure on some other sectors may have tempered the overall impact, a report in MorningStar.Com suggests.
The next CPI report expected from the Bureau of Labor Statistics on Wednesday will be keenly watched as it follows last week’s Presidential vote returning Donald Trump, perceived as largely business friendly, to the White House.
However, the MorningStar report suggests that the election uncertainty might have nudged bond yields higher over recent weeks, partly due to concerns about longer-term inflation worries.
FactSet’s consensus estimates expect core inflation, which excludes volatile food and energy prices, to rise 0.3% and hold steady at 3.3 percent annually.
“The labor-intensive categories as well as shelter remain problematic,” the report quotes José Torres, senior economist at Interactive Brokers, as saying. He points to price hikes in the transportation services and medical services categories and expects 0.2 percent price rise in October. His forecast of 2.5% annual inflation is a notch below the consensus of 3 percent.