The latest inflation numbers come out tomorrow and it's expected to remain high—here's what to know
The latest numbers from the Consumer Price Index (CPI) report come out tomorrow, and inflation is expected to remain high.
Forecasts expect it to barely dip below the 8% year-over-year rate it's been floating above since March.
Specifically, inflation is predicted to be 7.9% year-over-year as of October, according to a median forecast of 52 economists surveyed by Bloomberg News. Banks including Citigroup, Deutsche Bank, JP Morgan Chase and Wells Fargo have similar projections.
That's only slightly less than September's 8.2%, and well above the Federal Reserve's target rate of 2%.
If that happens, it will likely dampen hopes that the central bank will ease up on continued interest rate hikes over the next several months. That means that the cost of borrowing will continue to increase for consumers, and things like auto financing, credit cards and other loans will get more expensive.
"If we consider that improvement, it is setting a low bar," says Greg McBride, chief economist at financial services company Bankrate. "We've been head-faked multiple times, thinking we're starting to turn the corner only to see inflation rise again."
While an inflation rate decrease would be good news, there needs to be a streak of consecutive months of steady declines before we can say inflation is under control, McBride says.
Core inflation remains untamed
The steady 6.6% year-over-year rise of core inflation is still a pressing concern. Core inflation is a broad measure of all consumer prices, except food and gas, which tend to be more volatile.
Far from slowing, the pace of core inflation is expected to have risen by another half percent, following a 0.4% gain in September.
"The annual core rate of inflation has increased the past three months and is running at the hottest pace in 40 years," McBride says.
The Federal Reserve has "ways to go" in bringing down inflation, Fed chairman Jerome Powell said, citing last month's inflation data. That will hopefully be done through continued interest rate hikes, which discourage spending.
If Thursday's report is worse than expected, the prospect of another "jumbo" 0.75 percentage point interest rate increase in December is more likely. Most forecasts currently assume a December rate hike of 0.5 percentage point, the probability of which was 52% as of Wednesday afternoon, according to the CME FedWatch Tool, which measures rate hike probabilities.
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