October is right around the corner, and with it comes the anticipated release of the U.S. inflation report. Experts expect that the report will show slower price growth, compared to the past several months. This could be an indication of a slowing economy, but economists will have to wait and see what the figures show.
The Consumer Price Index, which tracks changes in prices of many consumer goods and services, is expected to rise by about 1.5 percent year-over-year in October. This is a big slowdown from the September figures, which were up 2.3 percent year-over-year. The main contributors to the deceleration have been the cooling of energy prices and slower growth in the prices of food items.
The Producer Price Index, which tracks prices at the wholesale level, is expected to slow from a 1.4 percent rise in September to a 0.6 percent rise in October. This could be a sign that the economy is sluggish, although economists caution that the Federal Reserve’s interest rate cuts could be leading to some price distortions.
Despite the expected slowdown in prices, experts still expect that the moderate inflation experienced over the last several months will have a net positive effect on the U.S. economy. Persistent low inflation is seen as the “Goldilocks” spot, neither excessively high or too low, being just right to foster economic growth.
We’ll have to wait and see what the October inflation report brings. Some economists are cautiously optimistic that U.S. economic activity will pick up in the fourth quarter, and the inflation report may be some of the earliest indicators.