The consumer price index, the top measure for inflation in the U.S., increased in October to 2.6% in the 12-month period ending last month, according to the Bureau of Labor Statistics, which released the updated consumer price index on Wednesday.
The new data shows that inflation is slightly below recent norms. In the last decade, prices generally increase at a rate of 3.2% per year. In the last 20 years, consumer inflation has generally increased by 3% annually.
The consumer price index weighs the costs of goods based on their importance. Items like food, shelter and energy tend to be weighted more heavily.
After annual inflation reached 9% in the middle of 2022, the Federal Reserve implemented a series of interest rate hikes in 2022 and 2023 to combat high inflation. Federal Reserve Chair Jerome Powell stated the Federal Reserve's goal is to reduce inflation to an annualized rate of 2%.
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The federal interest rate climbed to a 23-year high in 2023 and remained there until late September when Powell dropped interest rates by half of a basis point. Powell then implemented another 0.25-point drop to federal interest rates earlier this month, indicating the Federal Reserve has confidence the worst effects of inflation are behind the U.S.
With wages outpacing the inflation rate, Americans are regaining some of the buying power lost in 2022.
Average hourly wages increased 13 cents in October to $35.46. Workers are making an average of $1.36 an hour more than a year ago. Average weekly wages were $1,216 in October, up from $1,169 a year ago. The 4% increase in wages is outpacing inflation.
Slowing inflation has been helped by a drop in energy prices. U.S. consumers are spending 4.9% less this year than in October 2023 on energy, according to the August 2024 consumer price index.
Prices for food meant to be consumed at home increased by a mere 1.1% over the last year. From June 2021 through June 2022, grocery prices increased 12.2%, according to the consumer price index.
