October CPI Met Market Expectations

The Gist

The Consumer Price Index (CPI) for October 2024 modestly increased 0.2% MoM (+2.6% YoY), and the rate has remained unchanged since July. Core CPI, which excludes food and energy, rose 0.3% MoM (+3.3% YoY). Both readings were largely in line with economists' expectations. Shelter and food costs proved the primary drivers of inflation, as a decline in gasoline prices provided some relief.

The Color

As mentioned above, housing costs remain a significant inflation driver, with shelter prices increasing 0.4% MoM in October. This rise in shelter costs has consistently added pressure to the inflation figures, accounting for over half of the 0.2% MoM increase and over 65% of the 12-month YoY increase. Food prices saw a modest climb of 0.2% MoM, led by grocery items, signaling continued cost pressures on household staples. On the other hand, energy prices were mixed, with gasoline prices decreasing 0.9% MoM, providing some minor relief to consumers who did see a 1.2% MoM hike in electricity costs.

The Takeaways

After the post-election gains that ran through Monday, investors again began focusing on inflation and the Fed on Tuesday. The reading proved in line with expectations and did not move markets, yet discussions about the Fed's cutting cycle have again become prominent. Expectations remain for a 25bp cut in December; however, the questions lie on how much the Fed will cut in 2025 if it cuts at all.

You can read the release here.