October US CPI

The news is old at this point. More than twenty-four hours ago, the Bureau of Labor Statistics released the agency's data for October consumer level inflation. Everything hit the tape as expected. One a month over month basis, the headline print landed at growth of 0.2% for a fourth straight month, while core inflation printed at growth of 0.3% for a third straight month. On a year over year basis, headline inflation accelerated from 2.4% growth in September to 2.6%, while core inflation crossed the tape at growth of 3.3% for a second straight month after having printed at growth of 3.2% for two straight months.

This is exactly what I have been warning readers about for months, that headline inflation would and did bottom in September and would start to reaccelerate gradually from there. Just a reminder, Hedgeye Macro Pro, a service that I pay for to be right about these things, was spot on accurate on this reading and saw this year over year increase coming well ahead of almost everyone else I track.

Mind you, this was with energy commodities such as gasoline and fuel oil dragging on prices. Apparel and medical care commodities also put downward pressure on consumer level pricing. What got hot? Electricity prices soared. Shelter, especially rent, remained stubborn. Used vehicle prices reaccelerated sharply and prices for transportation services continued to rise.

Just an FYI, the Cleveland Fed's Nowcasting model now sees headline November CPI at growth of 2.71%, while my pals over at Hedgeye see November above 2.8%. Regardless of source, and trusting those who have been correct more often than others, November looks to be hotter than October, which was hotter than September. An additional problem is the stickiness of core inflation. While the Fed's quarterly projections have core inflation continuing to slow consistently into 2026, of late, this is not what we consumers are seeing. Consumer level pricing very likely continues to accelerate through year end 2024, and into Q1 2025.

Is the potential for a Trump administration trade agenda that includes a broad slate of increased tariffs inflationary? In theory, yes. This depends on a lot though. It depends on how much of these threats are negotiatory in nature, putting pressure on trading partners to reduce their tariffs. Remember, a certain level or protectionism does indeed preserve to a point, middle class standards of living. This depends on what that does to dollar valuations. A stronger dollar is deflationary and will draw capital into this country. Oh, and lastly, the future path for inflation will rely upon how effective the new Department of Government Efficiency is at finding budgetary savings. The more fat or largess that can be cut from the federal budget, the better and we all know how fat and inefficient the government is.