Inflation accelerated in October, giving a first look at prices since the election

Consumer prices rose 2.6% in October from a year ago, ticking up from the previous month and reversing some of the cooling achieved in recent months, US Bureau of Labor Statistics showed data on Wednesday. The fresh report matched economists’ expectations.

The latest update offered a look at price increases a little more than a week after the issue appeared to help former President Donald Trump win re-election. The data snapped a streak of six consecutive months of cooling inflation.

Core inflation – a closely watched measure that strips out volatile food and energy prices – rose 3.3% in the year ended October, in line with the previous month, the data showed.

Food prices rose 2.1% over the year to October, marking a slower rise than the overall rate.

Prices fell over the past year for some common grocery items such as white bread, bacon and bananas. However, the price of eggs rose a staggering 30% over the previous year, primarily due to an outbreak of bird flu that has decimated supply.

Gasoline prices offered a bright spot in Wednesday’s report, falling more than 12% in the year ended October. Gasoline prices typically fall during the final months of the calendar year as drivers reduce consumption after the busy summer travel season.

Overall, inflation has fallen dramatically since peaking at 9% in 2022 and now hovers near the Federal Reserve’s target rate of 2%.

The slowdown in price increases has coincided with robust economic growth, establishing the dual conditions necessary for the US to achieve a “soft landing.”

Still, Fed policymakers predict inflation will ease toward normal levels next year and reach the central bank’s target rate in 2026, according to projections released in September.

The Fed cut interest rates by a quarter of a percentage point last week. The move came two months after the Fed cut its benchmark interest rate by half a percentage point, bringing back the fight against inflation since it began in 2021.

The Fed is guided by a dual mandate to keep inflation under control and maximize employment. In theory, lower interest rates help stimulate economic activity and increase employment.

While the central bank’s concern about inflation has subsided in recent months, a renewed focus on the labor market has risen to the fore. Employment has continued to grow, but growth has slowed in recent months. Unemployment has risen from 3.7% to 4.1% this year.

“We remain confident that with an appropriate recalibration of our policy stance, strength in the economy and the labor market can be maintained with inflation moving sustainably down to 2%,” Fed Chairman Jerome Powell said at a news conference in Washington, DC. last week.

Although inflation has slowed, this progress has not reversed a price jump dating back to the pandemic. Since President Joe Biden took office in 2021, consumer prices have increased by more than 20%.

The price increases appeared to bolster support for Trump in last week’s election. More than two-thirds of voters say the economy is in bad shape, according to preliminary results of an ABC News exit poll.

However, Trump’s proposals for increased tariffs and mass deportations of undocumented immigrants could revive rapid price increases, some experts previously told ABC News.

Asked last week about the Fed’s potential response to Trump’s policies, Powell said the central bank would make its decisions based on how any policy changes could affect the economy.

“In the short term, the election will have no impact on our policy decisions,” Powell said on Thursday. “We don’t know what the timing and content of any policy changes will be. We therefore don’t know what the effects on the economy will be.”

“We don’t guess, we don’t speculate, and we don’t assume,” Powell added.