Inflation slowed in the United States in October after rising again for several months this summer, good news both for Joe Biden, less than a year before the presidential election, and for the central bank, which is looking to curb that price rise .
• Also read: USA: The Fed could raise interest rates further “if necessary,” warns Powell
According to the CPI index released by the Labor Department on Tuesday, price growth over a year was 3.2%, compared with 3.7% in September.
These numbers are a “pleasant surprise,” commented Jason Furman, Harvard professor and former White House economist, in a tweet.
This is the first time this index has fallen since June, even falling to zero in just one month, with prices identical to September.
According to the MarketWatch consensus, analysts expected general inflation to be 0.1% over a month and 3.3% over a year.
In particular, gasoline prices at the pump have fallen. Hotel accommodation, used cars and airline tickets also cost less. But spending on food continued to rise, as did housing, car insurance and even health insurance.
Another measure that has fallen sharply: So-called core inflation, which excludes volatile food and energy prices, is at 4.0% over a year, its lowest level in more than two years. Over a month it is 0.2%, compared to 0.3% in September.
Biden welcomes “progress”
After Covid-19, prices in the US, like elsewhere in the world, skyrocketed, and inflation reached its highest level in more than 40 years at 9.1% in June 2022, then declined and fell to 3 a year later. 0%.
But driven by real estate and gasoline prices at the pump, the price rebounded this summer.
This decline in all inflation figures is good news for American President Joe Biden, less than a year before the presidential election.
In a press release, he welcomed this “new progress in reducing inflation (being made) while maintaining one of the strongest labor markets in history.” And sees this as a result of his economic policy.
Persistently high inflation was a thorn in the side of the Democratic president. The Republican opposition accuses its stimulus plans, which have poured billions into the economy, of fueling price increases.
And it also caused the New York Stock Exchange to jump at the opening on Tuesday morning.
Too high
In order to contain the price rise, the American central bank Fed has the reins in hand. It has raised its key interest rate eleven times since March 2022, bringing it to its highest level in 22 years in a range of 5.25 to 5.50%.
This leads to a slowdown in consumption and investment and thus a reduction in price pressure.
However, at the last two meetings in September and early November, Fed officials decided to keep interest rates at the same level to give the successive hikes time to have their full impact on the economy.
These numbers could convince them not to bring it up again at the next meeting in mid-December.
Chicago Fed President Austan Goolsbee, who has rotating voting rights within the institution in 2023, expressed confidence Tuesday that inflation can fall while maintaining solid economic growth and therefore a strong labor market.
“It’s more than a soft landing. “It’s the softest of soft landings,” he told the Economic Club of Detroit, Michigan.
Many economists now believe that the USA can escape the much-vaunted recession.
But Fed officials have made it clear: They will not hesitate to raise interest rates again if inflation does not slow sustainably. They want to reduce price increases to 2.0% within a year, but favor another measure of inflation, the PCE index, which will be published at the end of the month.