U.S. consumer price index rose less than expected in October pushing the annual increase below 8% for the first time in eight months, the Labor Department said Thursday.
This is the strongest sign yet that inflation is starting to subside, after months of high prices that have been hitting the U.S. economy and forcing the Federal Reserve to hike interest rate.
The consumer price index, that measures goods and services costs, increased 0.4% for the month and 7.7% from a year ago. Dow Jones expected increases of 0.6% and 7.9%, respectively.
Excluding volatile food and energy costs, the so-called core CPI increased 0.3% in October and 6.3% on an annual basis, compared with respective estimates of 0.5% and 6.5%.
The Fed last week delivered a fourth consecutive 75-basis-point interest rate hike as it keeps fighting to bring down inflation to a 2% target. The central bank signaled then that it may be nearing an inflection point in the fastest rate hiking cycle since the 1980s.
“This was the big drop I had been expecting, as year-over-year comparisons become more difficult for most categories with the shelter component, which accounts for nearly a third of the CPI index, the next to fall,” said contributor Lawrence Fuller.
A 2.4% decline in used vehicle prices helped bring down the inflation figures. Apparel prices fell 0.7% and medical care services were lower by 0.6%.