October CPI Report Telling’s
Tyler Fernandes
Staff Writer
With the recent publication of the October Consumer Price Index report, we have some new insight into recent inflation trends. Over the past few years, we have seen inflation dramatically increase. This year inflation eased, beginning with the month of October and price increases showed encouraging signs to come. The overall Consumer Price Index or CPI slowed to 3.2% on a month-to-month basis and a 3.7% telling in a year basis for the previous month of October. Many factors have positively impacted the outcome of October’s CPI report, including the cooling of energy prices. Although we can see inflation decreasing over the past year, the Fed is still trying to get back to “normal” by hiking interest rates and getting the price increases to about 2%. Altogether, this step towards the 2% target rate shows that the Fed’s decisions regarding monetary policy have been effective in working to return inflation to a more moderate level.
There are many other factors that inflation and rising prices have on the economy. One very important and direct impact it has could be seen on the stock market. On November 1st, the Fed concluded their monthly meeting, announcing that for the second straight month, they were not going to raise interest rates. Following this information stocks soared. The S&P 500 rose 1.9% on Tuesday, November 21st and the Russell 2000, which is comprised of smaller companies rose 5%. This increase in stock price shows that following the decision to keep rates steady, investors have increased confidence in the markets.
On the other hand, the Bond market seemed to have a major move from 0.2 percentage points to about 4.5% in the two-year treasury yield for the bond market. This is big for the bond market since we typically see it increase by a very small margin.
In conclusion, the October CPI report results have been very positive. Overall, with the assistance of the Fed’s fiscal policy decisions, we have seen inflation within the year 2023 come much closer to the desired rate. This is a reassuring sign for consumers, who have felt the effects of historically high inflation rates over the past few years. Looking to the future, it will be important to keep an eye on future decisions by the Fed, and what role they might play on the economy moving forward.
Contact Tyler at tyler.fernandes@student.shu.edu