Inflation rose 0.4% on a monthly basis in October as the annual rate undercut expectations to come in at 7.7%, according to the Bureau of Labor Statistics (BLS).

Economists predicted that inflation would grow 0.6% on a monthly basis and 7.9% on an annual basis in October, according to a survey conducted by Bloomberg. Core inflation, which discounts the prices of food and energy due to their volatile nature, increased 0.3% on a monthly basis, but nudged down in October to 6.3% on an annual basis from September’s 40-year high of 6.6%, the BLS reported.

“A strong labor market and strong job growth supports strong demand, which allows inflationary pressures to stay elevated,” U.S. economist at T. Rowe Price, Blerina Uruci, told The Wall Street Journal. “You’ve got more demand chasing goods and services, the supply of which is being impaired at the moment for a number of reasons.”

It’s US CPI Thursday.

Consensus forecasts are expecting an annual headline inflation of 7.9% (0.6% MoM) and core of 6.5% (0.5%).

Look also for where we stand on the evolution of the drivers of #inflation, including the shift to services and, implicitly, the role of wages#economy

— Mohamed A. El-Erian (@elerianm) November 10, 2022

Food prices were up 10.9% on an annual basis, continuing to moderate slightly from the 40-year highs set in August but still well above February’s 8.6%, which was a record at the time, and more than five times greater than the Federal Reserve’s target of 2% inflation for all items.

Investors took recent remarks from Jerome Powell as an indication that the Fed will likely stop raising interest rates at a higher level than previously anticipated, Yahoo Finance reported Sunday.

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