U.S. Consumer Prices Rise in October After Declining for Last Two Months

U.S. Consumer Prices Rise in October After Declining for Last Two Months

U.S. consumer prices rose in October after two straight months of declines. This may signal a rate hike by the Fed and that the holiday season has begun.

U.S. consumer prices rose in October after having seen two months in a row where prices had significantly fallen. For some analysts, the boost in prices for services and goods may be an early sign of inflation and will signal an increase in interest rates when the Federal Reserve, America’s central bank, meets next month. For other analysts, however, the rising prices are a signal that the holiday shopping season has begun.

The U.S. Labor Department announced on Tuesday that the consumer price index for October rose 0.2 percent. This comes on the heels of the same percentage decline that had been registered for September. The slight uptick in consumer prices indicated to economists and financial analysts that there has, finally, begun an easing after a strong dollar and low oil prices had caused prices to drop in the last couple of months, reports Reuters.

The Federal Reserve considers this rise in prices to be a stabilizing factor on the economy. The Federal Reserve believes that October’s boost in prices will lower inflation, which has remained at a Federal Reserve target of 0.2 percent. This, when combined with what the Federal Reserve saw as a strong and encouraging jobs report for October, suggests that they will raise their overnight interest rate when they all meet next month. The Federal Reserve’s overnight interest rate has been almost zero for many months.

The Federal Reserve thinks that inflation will go lower and that there will soon be pressure put on wages. The last unemployment report for October declared that the government perceives the unemployment rate to be at 5.1 percent. The government considers 5 percent to be what they call full employment. That is, anyone who wants a job has a job. The unemployment figures released by the government, however, don’t take into consideration those who work part time or are severely underemployed, nor does it count those people who have dropped out and given up on finding any suitable work.

For October, gasoline prices rose 0.4 percent, food prices rose 0.1 percent, hospital costs rose 2.0 percent, rents rose 0.3 percent and airline fares rose a whopping 1.5 percent.

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