October CPI Suggests Inflation May be Slowing as Housing Demand Continues to Weaken

The Consumer Price Index (CPI) increased 0.4 percent in October, the same gain as in September, according to the Bureau of Labor Statistics. On an annual basis, prices were up 7.7 percent, a deceleration of five-tenths from September

After three months of significant declines, gasoline prices increased 4.0 percent. Food prices rose 0.6 percent over the month, the slowest rate since December 2021.

The National Federation of Independent Business (NFIB) Optimism Index declined 0.8 points to 91.3 in October, breaking a streak of three consecutive modest increases.

Consumer (non-mortgage) credit outstanding increased by $25.0 billion in September, a modest slowdown from the $30.2 billion increase in August, according to the Federal Reserve Board.

The Federal Reserve Board Senior Loan Officer Opinion Survey (SLOOS), for the three months ending in October, reported a modest net tightening of lending standards for subprime and jumbo residential loan types, while for other categories lending standards were essentially unchanged. For the fifth consecutive quarter, there was a decline in reported demand for all mortgage types.

Forecast Impact: October inflation data was somewhat cooler than anticipated and may cause a modest downgrade to our near-term inflation forecast. We had long predicted that goods prices would eventually drag on CPI as supply chain pressures eased and demand declined, which finally materialized in this report.