The latest print from the Labor Department shows Consumer Price Inflation (CPI) cooled down to 7.7% for the month of October as energy and food prices took a breather amid decades-high inflation rates.
Core CPI, which excludes energy and food prices came in at 6.3% as compared to the earlier 6.6% mark.
A confluence of factors including global geopolitical tensions, the Russia-Ukraine conflict, robust spending by consumers, and supply chain woes had resulted in inflation galloping to four-decade-high levels over the past year.
Further, while the Fed has already undertaken four consecutive rate hikes, unemployment levels remained low for October, and increasing wages added to household budgets.
The central bank has indicated it could keep raising rates (albeit in smaller doses) which further aggravates the possibility of a recession.
At the same time, rising mortgage rates continue to exact a toll on the housing market evident in falling home sales cooling price gains.
The worsening macro conditions are having a gradual impact with a recent survey indicating nearly one-third of small businesses in the U.S. are not able to make rent payments.
While indications are afoot that prices are cooling in some areas (first in sectors sensitive to interest rates), the Fed remains focused on the 2% inflation target and it could be a while before it reverses its aggressive stance.
Broader indices are already up between 2.5% and 4% today while yields are taking a tumble.
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