October Consumer Price Index: Has Inflation Peaked? (UPDATED)

 

A sign of hope on the inflation front?

Stocks surged Thursday after October’s reading of consumer prices raised hopes that inflation has peaked.

The Dow Jones Industrial Average jumped 820 points, or 2.5%. The S&P 500 jumped 4%, while the Nasdaq Composite surged 5.5%. *

The consumer price index, a broad-based measure of goods and services costs, rose just 0.4% for the month and 7.7% from a year ago. That was its lowest annual increase since January. Economists were expecting increases of 0.6% and 7.9%, according to Dow Jones. Excluding volatile food and energy costs, so-called core CPI increased 0.3% for the month and 6.3% on an annual basis, also less than expected.  (our emphasis)

Inflation may (or may not have) peaked, but it still needs to come down to the historical level of 3.8% per year.

The data, if bolstered by another month of no/low CPI increase, may signal to the Fed that it can ease off from its recent federal funds rate increases.  Improving issues with the supply chain and perhaps a winter pause in the war in Ukraine may also ease inflationary pressures.  Now that the mid-term elections are over with Democrats fending off a "red wave," Republican- wired corporate profiteers may think twice about gouging the public as they reap record profits.

* UPDATE:  The rally got bigger --

Stocks mounted their biggest rally since 2020 after October’s reading of consumer prices raised investor hopes that inflation has peaked.

The Dow Jones Industrial Average jumped 1,201.43 points, or 3.7%, to 33,715.37 for its biggest one-day gain since stocks were emerging from the depths of the pandemic bear market. The S&P 500 jumped 5.54% to 3,956.37 in its biggest rally since April 2020. The Nasdaq Composite surged 7.35%, its best since March 2020, closing at 11,114.15.