CPI, Latest Release, October 2024
Headline CPI rose 2.6% year-over-year, up from 2.4% last month. As inflation moves closer to the Fed’s target of 2.0%, these monthly fluctuations are to be expected. Over the month, CPI increased 0.2%. Both figures were in line with analysts’ forecasts. Excluding food and energy, prices rose 3.3%, matching last month’s level. The 0.3% monthly gain in core inflation was driven largely by airline fares (3.2%), used cars and trucks (2.7%) and car repairs and maintenance (1.1%).
CPI for Housing, October 2024
The CPI includes two measures for shelter costs: owners’ equivalent rent (OER) and rent of primary residence, both of which are self-reported. Together, they comprise about one-third of CPI. Rents decelerated once again, increasing 4.6% year-over-year, the lowest rate since March 2022, while OER stagnated at 5.2%. On a monthly basis, both rents and OER remained elevated at 0.4%. By comparison,
RealPage reported year-over-year rent growth of 0.3% in October and a decline of -0.4% from September, in line with seasonal trends.
Super Core Inflation, October 2024
Due mainly to lags in CPI shelter data, the Fed has begun to focus more on “super core” inflation, that is, prices excluding food, energy and shelter. Super core inflation remained flat at 2.1% year-over-year, although monthly increases moderated at just 0.1%. In addition to the core categories previously discussed, prices increased for tobacco and smoking products (0.6%) and medical care services (0.4%).
Inflation Expectations, October 2024
The Fed tracks 21 different measures of inflation expectations. The data presented in the chart below are inflation expectations one year from now from the Federal Reserve Bank of New York’s Survey of Consumer Expectations and the University of Michigan’s Consumer Sentiment Index. Consumers who took part in the University of Michigan’s survey expect an inflation reading of 2.7% twelve months from now, matching last month’s rate, which was the lowest level since late 2020. Inflation expectations from the Fed’s survey edged down to 2.9%, also the lowest level in four years. Consumers were generally more optimistic about the future availability of credit as well as the job market.
Wage Growth, October 2024
Wage growth, as measured by average hourly earnings, has shown little movement, increasing 0.4% over the month and 4.0% year-over-year. Winning sectors included information and professional/business services, both up 5.1%. The financial activities sector, including real estate, remained above the national average, rising 4.4%. Despite their stickiness, wages are expected to moderate in the coming months as the labor market continues to cool.
What to Watch in the Next Month
- As expected, the Fed lowered interest rates by 25 basis points to a range of 4.5-4.75% with financial markets currently pricing in a high probability for a similar cut at its December meeting, according to the CME FedWatch tool.
- It’s clear that the upcoming administration’s tariff proposals will be inflationary, but the unknowns of timing, magnitude and legalities make predictions difficult. However, Oxford Economics’ forecast calls for impacts to be delayed until 2027 when approximately 0.3 percentage points would be added to headline inflation.
Next Tracker: December 11, 2024