U.S. Inflation Eases in October for the Fourth Straight Month

The U.S. inflation rate is still historically high, but figures released by the government this week show there may be cause for at least cautious optimism.

Prices at the wholesale level rose 8% in October from a year ago, the fourth straight decline and the latest sign that inflation pressures in the United States are easing from painfully high levels, the Associated Press reported.

That’s down from 8.4% in September. On a monthly basis, the government said its producer price index, which measures costs before they reach consumers, rose 0.2% in October from September. That was same as in the previous month, which was revised down from an initial reading of 0.4%, the AP reported.

The figures came in lower than economists expected and make it more likely that the Federal Reserve will increase its benchmark interest rate in smaller increments. When Fed chair Jerome Powell announced the last .75% increase last month, he hinted that future increases could be smaller.

While the Fed increased its short-term rate by .75 for four meetings in a row, economists now believe the increased that comes out of the Fed board’s December meeting is likely to be a half-point.

“The improvement in the October inflation data, if it persists, supports the Fed’s expectation of a step down in the pace of increases going forward,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, a forecasting firm, told the AP.

Most of the monthly increase reflected higher gas prices at the wholesale level, which rose 5.7% just in October. The cost of new cars fell 1.5%, last month, which could lead to lower prices at the retail level as well.

Excluding the volatile food and energy categories, core producer prices were unchanged in October from September, the lowest reading in nearly two years. Core prices increased 6.7% last month from a year ago, down from a 7.1% annual rate in September.