The October 2024 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation increased by 0.2% for the month, matching July, August, and September’s 0.2% rise. These data were released at 8:30 am EST on Wednesday, November 13, 2024, by the Bureau of Labor Statistics. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 2.6%, a slight uptick from the 2.4% witnessed in September.
Despite that, the CPI data mostly matched economists’ estimates. The table below is courtesy of Investing.com. The left column represents October’s figures, while the right column represents forecasters’ expectations. Outside of the index levels (marked in green), the rest of the results (marked in black) aligned with the consensus.
This is welcome news to FOMC Chairman Jerome Powell. The committee’s decision to cut interest rates by 25 basis points on Nov. 7 should avoid scrutiny as the inflation results may calm fears of another price acceleration. He said during his post-meeting press conference:
“Inflation has moved down a great deal from its highs of two years ago, and we judge, as I mentioned, that it’s on a sustainable path back to 2%. The job’s not done on inflation, but we judged in September that it was appropriate to begin to recalibrate our policy stance to reflect this progress, and today’s decision is really another step in that process.”
He added:
“We’re not declaring victory, obviously, but we feel like the story is very consistent with inflation, continuing to come down on a bumpy path over the next couple of years and settling around 2%. That story is intact, and it won’t be one or two really good data months or bad data months aren’t going to really change the pattern at this point now that we’re this far into the process.”
As a result, while October’s CPI data is another chapter in Powell’s inflation story, the momentum continues to trend in a positive direction.
Most headline inflation metrics were well-behaved in October, with only used cars and trucks and electricity increasing by 2.7% and 1.2% month-over-month. Core inflation (which excludes the impacts of food and energy), rose by 0.3% in October, matching August and September’s print. But, the shelter index rose by 0.4%, a noticeable increase from the 0.2% reported in September.
Food Prices
The food index showcased progress in October, rising by 0.2%, and declining from September’s 0.4% print. Five of the six major grocery store food indexes increased:
- Cereals and bakery products (+1.0%)
- Meats, poultry, fish, and eggs (-1.2%)
- Dairy and related products (+1.0%)
- Fruits and vegetables (+0.4%)
- Nonalcoholic beverages (+0.4%)
- Other food at home (+0.1%)
In addition, the food away from home index rose by 0.2% — a decline from August and September — which means restaurant prices largely tracked overall inflation in October.
Energy Prices
The energy index was flat in October after declining by 1.9% in September. Gasoline prices dropped by 0.9% (1.9% without seasonal adjustments), while electricity and natural gas prices rose by 1.2% and 0.3%, respectively.
Core CPI October 2024
The October core CPI rose by 0.3% month-over-month and 3.3% Y-o-Y. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.4%) [September: +0.2%]
- Rent index: (+0.3%) [September: +0.3%]
- Owners’ equivalent rent: (+0.4%) [September: +0.3%]
- Motor vehicle insurance: (-0.1%) [September: +1.2%]
- Medical care services: (+0.4%) [September: +0.7%]
- Physician services: (+0.5%) [September: +0.9%]
- Hospital services: (+0.5%) [NA]
- Airline fares: (+3.2%) [September: +3.2%]
Seasonally Unadjusted CPI Data for October 2024
Before seasonal adjustments, the CPI-U for October 2024 increased by 2.6% Y-o-Y, rising to an index level of 315.664. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
More Cuts to Come?
While investors are eager for rate cuts and a return to pre-pandemic monetary policy, Powell cautioned that the ebbs and flows of economic data will decide the FOMC’s future path.
“Nothing in the economic data suggests that the committee has any need to be in a hurry to get there,” he said. “We are seeing strong economic activity, we are seeing ongoing strength in the labor market; we’re watching that carefully. But we do see maintaining strength there. And so we think that the right way to find neutral, if you will, is carefully, patiently.”
He added:
“The precise timing of these things is not as important as the overall arc of them, and the arc of them is to move from where we are now to the sense of neutral, a more neutral policy. We don’t know exactly where that is, we only know it by its works. We’re pretty sure it’s below where we are now.”
So, while resilient economic data allows Powell to take a patient approach, the long-term trend should eventually produce lower rates in the months ahead.
In the meantime, a major divergence for risk assets unfolded following the Nov. 6 U.S. Presidential election. Bitcoin and Ethereum soared, while gold and silver sold off. However, the U.S. dollar was a major beneficiary, and gold often has a negative correlation with the greenback.
Yet, the short-term correction should give way to higher prices over time, as Goldman Sachs forecasts gold will hit $3,000 in 2025. The blue line below tracks gold’s price path, while the gray line at the top measures the implied futures price, and the dotted red line measures Goldman Sachs’ forecasted price. As you can see, the investment bank is more bullish than the futures market and expects gold to outperform for the foreseeable future.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Remember, seek the guidance of a financial advisor before making any investment decision.
Alex Demolitor is a Canadian financial writer hailing from Halifax, NS. Alex has a Bachelors Degree from King's College and passed the CFA Exam Level III. He specializes in fundamental analysis of the stock, bond, commodity, and FX markets. He also covers US & Canadian economic indicators.
