Inflation slowed in October in the United States

Inflation slowed in the United States in October after several months of rising this summer, good news for both Joe Biden, less than a year away from the presidential election, and the central bank, which wants stop this rise in prices.

• Read also: US: Fed could raise rates further ‘if needed’, Powell warns

The increase in prices stood at 3.2% in a year, compared to 3.7% in September, according to the CPI index published on Tuesday by the Labor Department.

Those numbers are a “pleasant surprise,” Harvard professor and former White House economist Jason Furman said in a tweet.

It is the first time since June that this index has fallen and, in just one month, it even fell to zero, with prices identical to those of September.

Analysts had expected headline inflation of 0.1% in a month and 3.3% in a year, according to the MarketWatch consensus.

Gasoline prices at the pump, in particular, have fallen. Hotel nights, used cars and plane tickets also cost less. But food continued to rise, as did housing, car insurance and even health care.

Another measure that has fallen sharply: so-called core inflation, which excludes volatile food and energy prices, is at its lowest level in more than two years, at 4.0% in a year. It is 0.2% in one month, compared to 0.3% in September.

Biden praises ‘progress’

Prices soared after Covid-19, in the US as elsewhere in the world, and inflation hit its highest level in more than 40 years in June 2022 at 9.1%, then fell , until falling to 3.0% a year later.

But, boosted by housing prices and gas at the pump, it bounced back this summer.

This decline in all inflation figures is good news for US President Joe Biden, less than a year before the presidential election.

He celebrated, in a press release, this “new progress in reducing inflation (which is being done) while maintaining one of the strongest labor markets in history.” And he sees it as the result of his economic policy.

Persistently high inflation was a thorn in the Democratic president’s side. The Republican opposition accuses his recovery plans, which injected billions of dollars into the economy, of fueling the price hike.

And it also caused the New York Stock Exchange to jump at the open Tuesday morning.

Too high

To contain the rise in prices, it is the American central bank, the Fed, who holds the reins. Since March 2022, it has raised its main interest rate 11 times, taking it to its highest level in 22 years, to a range of 5.25% to 5.50%.

This has the effect of curbing consumption and investment and thereby easing pressure on prices.

During the last two meetings, however, in September and early November, Fed officials chose to keep rates at the same level, to allow time for successive increases to produce their full effects on the economy.

These numbers could convince her not to touch it again at the next meeting in mid-December.

Chicago Fed President Austan Goolsbee, who has rotating voting rights in the institution until 2023, was confident on Tuesday about the possibility of seeing inflation fall, while maintaining solid economic growth, and therefore a market vigorous labor

“It’s more than just a soft landing. It’s the softest of all soft landings,” he told the Economic Club in Detroit, Michigan.

Many economists now believe that the United States will be able to escape the much heralded recession.

However, Fed officials have made it clear: they will not hesitate to raise rates again if inflation does not slow down sustainably. They want to reduce the rise in prices to 2.0% in a year, but favor another measure of inflation, the PCE index, which will be published at the end of the month.