A key measure of US inflation has risen for the first time since March, underlining its bumpy ride down to lower levels.
The consumer price index (CPI), which measures price growth across a basket of goods, ticked up to an annual pace of 2.6% in October – from 2.4% in September, which had been the slowest rate in more than three years.
Stripping out volatile food and energy costs, the closely watched “core” inflation index held firm at 3.3%. The reading was in line with economists’ expectations.
Though inflation has fallen dramatically since peaking at a four-decade high in summer 2022, many Americans are still under pressure after years of price increases.
Frustration over the cost of living appeared to play a major role in the election, with exit polls indicating that the majority of Republican voters were frustrated with the US economy and their financial situation.
On the campaign trail, Donald Trump proffered tax cuts and tariffs as solutions, but questions have been raised about what such policies will actually mean for inflation.
The president-elect has pledged to enact tariffs of at least 10% on all US imports, a policy that many economists say would probably lead to inflation going up as much as 5.1%, according to the Budget Lab at Yale.
The Federal Reserve cut interest rates for the first time in four years in September, a key turning point in its battle to bring down inflation. It lowered rates again last week, to their lowest level since February 2023.
At a press conference, the Fed chair, Jerome Powell, said the central bank “has gained confidence that we’re on a sustainable path down to 2%”, its target for inflation, but added: “The job’s not done.”
The Fed has been trying to carry out its “dual mandate”, managing price increases without triggering higher rates of unemployment.
The labor market has slowed significantly over the last few months, with the US adding just 12,000 jobs in October. After hitting a low of 3.4% in February 2023, the unemployment rate in October was 4.1% – still a low rate, comparable with pre-pandemic levels.
When asked whether the outcome of the election affects the Fed’s decision on interest rates, Powell said officials “don’t know what the timing and substance of any policy changes will be. We therefore don’t know what the effects on the economy would be.”
