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10-Year Expected Inflation EXPINF10YR St Louis Fed

October’s core CPI, which excludes volatile food and energy prices, is expected to increase 3.3% annually and 0.3% on a monthly basis. The Consumer Price Index (CPI), due to be released Wednesday, is expected to show prices increased at annual rate of 3.0%, the same as it was in June, according to economists surveyed by The Wall Street Journal and Dow Jones Newswires. For the closely-watched “core” CPI inflation, which strips out volatile food and energy costs, economists expect an annual rate of 3.2%, just a tick down from 3.3% in June. Although the first three months of the year showed consumer prices rising more than expected, a relatively tame report in April raised hopes that the uptick was more of a fluke than a genuine resurgence.

What You Need to Know Ahead of Thursday’s Key CPI Inflation Report

The readings took inflation further away from the Federal Reserve’s 2% goal and could complicate the central bank’s monetary policy strategy going forward, particularly with a new administration taking over the White House in January. Energy costs, which had been declining in recent months, were flat in October while the food index increased 0.2%. This chart compares the model’s estimate of 10-year real interest rates against TIPS yields. The comparison can be interpreted as illustrating the importance of factors not in the model (taxes, liquidity, the embedded option) for the TIPS market.

Specifically, inflation is predicted to be 7.9% year-over-year as of October, according to a median forecast of 52 economists surveyed by Bloomberg axi review News. Banks including Citigroup, Deutsche Bank, JP Morgan Chase and Wells Fargo have similar projections. Bank of England interest rates rose from 0.1% in December 2021 to 5.25% in August 2023. The Bank of England now forecasts that the Budget’s new fiscal measures will add 0.50 percentage points to CPI and boost GDP by 0.75 percentage points. The details of the report may shed light on inflation’s impact on people’s everyday finances, as well as the outlook for the Fed. Fed officials have kept the rate at a 23-year high since last July in an effort to discourage borrowing and spending and push down inflation from the four-decade high it hit in 2022.

How to Interpret the Latest Data and Charts

Focusing on the core personal consumption expenditures price index, the preferred Fed gauge, Wells Fargo sees inflation at 2.5% for the year, versus a prior estimate of 2.2%. The 10-year expected inflation estimate that we report is the rate that inflation is expected to average over the next 10 years. It appears likely that July’s inflation report will sustain the trend of relatively subdued inflation from recent months, according to nowcasts.

UK Inflation: What to Expect from October’s Data

Ease too rapidly, the thinking goes, and inflation could resurface, forcing the Bull by the Horns Fed to pivot back to cuts. That’s why the Consumer Price Index, or CPI report, has become one of the stars of the economic calendar. Consequently, traders in recent days have scaled back their anticipation for Fed rate cuts ahead. The central bank already has lopped off 0.75 percentage point from its key borrowing rate and had been expected to move aggressively ahead. The consumer price index, which measures costs across a spectrum of goods and services, increased 0.2% for the month. That took the 12-month inflation rate to 2.6%, up 0.2 percentage point from September.

Globally, the picture is similar—in the US, inflation has just ticked up again, and in the eurozone CPI fell below target in September, before rising again in October. This month, however, PPI is serving as the opening act — How to buy arcade and all eyes are on the headliner. Inflation hit a four-decade high in 2022, prompting the Federal Reserve to embark on its most aggressive campaign of interest rate hikes since the late Carter and early Reagan administrations. Used vehicle costs also rose, up 2.7% on the month while motor vehicle insurance declined 0.1% but was still higher by 14% for the 12-month period. Airline fares jumped 3.2% while eggs tumbled 6.4% but were still 30.4% higher from a year ago.

1. That means that the cost of borrowing will continue to increase for consumers, and things like auto financing, credit cards and other loans will get more expensive.
2. As inflation cools, the Fed is turning its attention from fighting inflation to preventing a sharp economic slowdown—a possibility that appeared more likely after a separate BLS report last week showed that the unemployment rate ticked up in June to its highest level since late 2021.
3. Despite signs of inflation moderating elsewhere, shelter prices continued to be a major contributor to the CPI move.
4. A report in line with expectations could leave the Fed on track to begin cutting interest rates in June, Juneau and Gapen wrote.
5. Fed watchers have been expecting rate cuts for months as inflation has cooled, only to be repeatedly disappointed.

If that happens, the CPI report is likely to provide support for the Federal Reserve holding back on interest rate cuts until July or later. That’s because inflation at approximately 3% is now relatively close to the FOMC’s 2% annual target. However, the FOMC’s other primary goal is full employment and unemployment has moved up steadily from a low of 3.4% last summer to 4.3% according to the July jobs report. That increase in unemployment may be enough to slow economic growth, and may be sufficient to motivate the FOMC to ease back from their currently relatively restrictive position on interest rates. Therefore inflation is perhaps no longer the critical data that FOMC is focused on. The consensus forecast among economists is for the CPI, a measure of the cost of living, to have risen 3.5% since last March, an acceleration from the 3.2% annual inflation rate in February, according to a survey of economists polled by the Dow Jones Newswires and the Wall Street Journal.

All told, inflation is still roughly in the same spot it was in June 2023, and stubbornly above the Federal Reserve’s target of 2%. In order to do so, please follow the posting rules in our site’s Terms of Service. The Bureau of Labor Statistics is set to deliver another round of mixed signals about the course of inflation on Wednesday when it publishes the official report for the Consumer Price Index for March.

Inflation expectations at the one- and five-year horizons held steady at 3% and 2.8%, respectively, according to the New York Fed survey. Schneider noted that the current 4.3% unemployment rate, although rising recently, remains well below the average seen during the past 50 years. Inflation, he added, also has cooled significantly since hitting a 40-year high in June 2022. Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women’s Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. « When is the next CPI report? » was a question no one was asking back in the days of 2% inflation readings.