Where Inflation Is Cooling—And Where It’s Staying Hot

Overall inflation cooled significantly in October, but whether you noticed a slowdown in price increases depends on what you tend to buy—prices for some important items continued to surge, while others have stabilized.

Inflation fell to 7.7% in October, down from 8.2% in September as measured by the 12-month change in the Consumer Price Index, the Bureau of Labor Statistics said Thursday. That was bigger than the drop to 7.9% economists expected, and a sign that the relentless, steep price increases that have plagued the economy for more than a year may finally be easing. Within that overall figure, some important prices continued to rise swiftly, while others have slammed on the brakes.

For example, used car prices, which saw year-over-year price spikes of 45.2% last year, have slowed down to 2% growth, the same as the Federal Reserve’s overall inflation target. Shelter, however, a category that encompasses home prices, rent, and hotel rates, advanced at 6.9%, its highest since 1982. 

The fact that price increases moderated in many categories may be a sign that we could be putting inflation behind us—so long as the trend continues in the months ahead, economists said. Further easing could encourage the Federal Reserve to back down from its campaign of anti-inflation interest rate hikes, which have raised borrowing costs and slowed down the economy. 

“The stiff backbone of U.S. inflation finally cracked in October, though one month doesn't make a trend,” Sal Guatieri, senior economist at BMO Capital Markets, said in a commentary. “That's a small win for the Fed.”

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