After Months of Stubborn Inflation, Glimmers of Hope Emerge - The New York Times 2022/11/11 上午10:36

https://www.nytimes.com/2022/11/10/business/economy/october-inflation-data.html

October Inflation Report

After Months of Stubborn Inflation, Glimmers of Hope

Emerge
The Consumer Price Index showed that prices climbed 7.7 percent in the year through October, a quick
pace but a notable moderation.

+14%

+12

Inflation
+10

+ 8
+7.7%
in Oct.
+ 6 +6.3%
excluding
food and
+ 4 energy

+ 2

– 2

1965 ’70 ’75 ’80 ’85 ’90 ’95 2000 ’05 ’10 ’15 ’20

Year-over-year percentage change in the Consumer Price Index • Source: Bureau of Labor Statistics • By Karl Russell

By Jeanna Smialek

Nov. 10, 2022 Updated 5:07 p.m. ET

Fresh economic data released Thursday showed that inflation cooled more than expected in October, a
hopeful development for American consumers and welcome news for the Federal Reserve and White
House after months of stubbornly persistent price increases.

While inflation is still rapid and painful for many households, it is finally beginning to show signs of turning
a corner. The Consumer Price Index slowed to a 7.7 percent gain in the year through October, less than the
7.9 percent that analysts had expected and down from 8.2 percent in the year through September.

After stripping out food and fuel costs, both of which jump around, prices rose by 6.3 percent on an annual
basis, down from 6.6 percent in the prior reading. And that core inflation measure pulled back sharply on a
monthly basis, posting its slowest increase in more than a year.

https://www.nytimes.com/2022/11/10/business/economy/october-inflation-data.html 第1⾴（共4⾴）
After Months of Stubborn Inflation, Glimmers of Hope Emerge - The New York Times 2022/11/11 上午10:36

The report provides early evidence that the Fed’s campaign to slow rapid inflation may be helping to ease
price pressures, working alongside recent healing in supply chains. The central bank has lifted interest
rates from near zero to nearly 4 percent this year as it tries to slow consumer and business demand and
give supply a chance to catch up.

Stocks surged on the news, as investors took it as a sign that Fed officials might raise rates less
aggressively and inflict less economic pain in their quest to tame inflation. The S&P 500 soared 5.5 percent,
its best one-day performance since April 2020, which marked the early market recovery from a
coronavirus-induced meltdown.

But a chorus of central bankers emphasized on Thursday that there is more work to do to ensure that price
increases return to a normal pace — and uniformly said that they are not done raising interest rates.

“This morning’s C.P.I. data were a welcome relief,” Lorie K. Logan, the president of the Federal Reserve
Bank of Dallas, said in a speech shortly after the report was released. “But there is still a long way to go.”

Daily business updates The latest coverage of business, markets and

the economy, sent by email each weekday. Get it sent to your inbox.

While Fed officials regularly emphasize that they are dedicated to wrestling inflation down even if that
process proves painful, President Biden has expressed optimism that the central bank can slow down the
economy without tipping it in to an outright recession. On Thursday, he heralded the data as evidence that
his and the Fed’s policies are working.

“Today’s report shows that we are making progress on bringing inflation down, without giving up all of the
progress we have made on economic growth and job creation,” Mr. Biden said.

The fresh report capped a good week for the president and his party, after midterm elections showed that
Republicans had failed to turn popular angst over rising prices into widespread victories at the ballot box.

Republicans tried to use the new data to emphasize that inflation remains rapid, and faster than pay
growth.

“With persistent and high inflation for the foreseeable future, American workers saw yet another pay cut in
their real wages last month,” Representative Kevin Brady, Republican of Texas and the ranking member of
the Ways and Means Committee, said in a statement.

While Fed officials welcomed the inflation slowdown, they did so in a far more muted way than the White
House: A single month of moderate improvement in the data was not enough to make central bankers
confident that still-rapid price increases will quickly fade, especially after more than a year and a half of
stubborn inflation and frequent false dawns.

The new data are still “far from a victory,” Mary C. Daly, the president of the Federal Reserve Bank of San
Francisco, said during a question-and-answer session in a webcast with the European Economics &
Financial Centre. She and her colleagues made clear that the path back to normal is a long and uncertain

https://www.nytimes.com/2022/11/10/business/economy/october-inflation-data.html 第2⾴（共4⾴）
After Months of Stubborn Inflation, Glimmers of Hope Emerge - The New York Times 2022/11/11 上午10:36

one.

Central bankers have signaled that they would like to slow their rate increases soon, and investors heavily
expected that step-down to come in December after the new inflation figures.

But markets also dialed back how many rate moves they anticipated next year following the release, and
Fed officials seemed to push back on that idea in remarks Thursday. A number of them suggested that
interest rates will still need to rise to a level where they are clearly weighing down the economy, even if at
a slower pace. Once rates are high enough, officials expect to hold them there for some time.

“The pace of hikes is less important than the strength and communication of this commitment,” Esther
George, president of the Federal Reserve Bank of Kansas City, said during a speech on Thursday
afternoon.

In their latest economic projections, central bankers estimated that rates would move above 4.5 percent
next year. Jerome H. Powell, the Fed chair, said during a news conference last week that they would likely
need to go even higher, given how resilient the economy and inflation have proved since those estimates
were released.

“We need to do more, and we will,” Loretta Mester, president of the Federal Reserve Bank of Cleveland,
said Thursday.

The Fed aims for 2 percent inflation on average over time, using a measure that is related to the Consumer
Price Index but comes out later in the month. Price increases remain far faster than that — and are
expected to remain abnormally brisk through the end of 2022.

Still, the underlying details of Thursday’s C.P.I. report showed encouraging trends that, if they continue,
could help inflation cool down more meaningfully in 2023. A slowdown in goods inflation that economists
have long anticipated finally showed up, with prices for clothing and used cars falling markedly.

“It shows some broad-based deceleration, which is helpful from the Fed’s perspective,” said Matthew
Luzzetti, chief U.S. economist at Deutsche Bank. “It was about the details of the report: Many of them were
supportive if they were to continue.”

Housing inflation remains rapid for now, but that is expected to change next year. Economists at firms
including T.D. Securities and J.P. Morgan predict that rent inflation could begin to slow notably as early as
the first three months of 2023.

Health insurance, which has been slightly adding to inflation, is now beginning to slightly subtract from it
because of the way it is calculated, and that is expected to continue. That health insurance decline only
matters for C.P.I., though: It will not feed into the Personal Consumption Expenditures inflation index that
the Fed officially targets.

And risks that could keep inflation sharply elevated persist, especially as consumer demand proves
resilient and the labor market remains strong. A big question going forward is what will happen in services
outside of housing: Pet care, child care, health care, manicures, meals out and the like.

https://www.nytimes.com/2022/11/10/business/economy/october-inflation-data.html 第3⾴（共4⾴）
After Months of Stubborn Inflation, Glimmers of Hope Emerge - The New York Times 2022/11/11 上午10:36

Prices for services are closely tied to wage gains, which have been climbing swiftly in recent months. If
that continues, it could be hard for inflation to fall the whole way back to the roughly 2 percent pace that
was normal before the pandemic. Companies are likely to try to pass rising labor bills along to consumers
in the form of higher prices.

“Services inflation, which tends to be sticky, has not really shown signs of slowing,” said Ms. Mester, from
the Cleveland Fed. “Inflation continues to be broad-based.”

While Fed officials do not want to tighten policy so much that they unnecessarily harm growth and cost
American jobs, they are also wary of doing too little.

The central bank has learned from the experience of the 1970s, when officials were never resolute enough
in raising interest rates to fully stamp out price increases. As inflation remained high for years, businesses
and consumers came to expect it and adjusted their behavior in ways that made inflation even harder to
control.

Back then, “the Fed said: ‘well, OK, we’ve got it coming down, so now we’ll stop raising rates, stop trying to
fight it back,’ and then it sort of reared its ugly head again, and got embedded in psychology,” Ms. Daly said.
“I’m not prepared to make that mistake.”

Joe Rennison contributed reporting.

https://www.nytimes.com/2022/11/10/business/economy/october-inflation-data.html 第4⾴（共4⾴）