Inflation progress stalls in US in October

Inflation in the US picked up last month, as progress toward stabilising prices appeared to stall.

Consumer prices rose 2.6% over the 12 months to October, driven by higher housing and food costs, the Labor Department said.

That marked a slight uptick from 2.4% the month before.

The latest figures added to speculation that the US central bank might not lower rates as much as had been expected in the months ahead.

The Federal Reserve wants to see inflation, the rate at which prices rise, fall back to about 2%.

It started cutting interest rates in September, noting the significant improvement since June 2022, when prices were surging at a rate of more than 9%.

But analysts are warning of new risks, as President-elect Donald Trump promises a mix of tax cuts, tariffs and migrant deportations that some say are likely to keep pressure mounting on businesses and consumers.

"While substantial progress has been made in the fight against elevated inflation, the 'last mile' is proving more challenging," said Josh Jamner, investment strategy analyst at ClearBridge Investments.

Mr Jamner said he did not expect to see significant market shifts as a result of the latest data, which were in line with expectations.

Prices advanced 0.2% from September to October, the same pace as in the previous three months.

“While US inflation coming in line with expectations means no nasty surprises for markets, the real quandary for the Federal Reserve is what do they do with rates from this point," said Lindsay James, investment strategist at Quilter Investors.

Price increases in recent years have caused significant public concern, helping Trump to victory in the presidential election this month.

Over the last 12 months, housing costs, including rents, rose 4.9%, the Labor Department said. In part because housing is heavily weighted in the US price index, that accounted for the majority of inflation over the past year.

Other big contributors included car insurance, which is up more than 14% from a year ago, as well as medical care and education, according to the report.

Prices for petrol, which have dropped 12% over the last year, mark the major exception to the overall rise in living costs.