The United States Consumer Price Index (CPI) was expected to increase 3.6%, but exceeded expectations, reaching 3.7% in the 12 months . This was driven, in large part, by rising housing costs.
Meanwhile, September saw costs rise only gradually on a variety of goods and services, providing evidence that inflation continues to retreat toward the Federal Reserve's target.
What is the CPI?
The Consumer Price Index (CPI) measures changes in the prices of goods and services, it would be the American version of our IPCA . The CPI evaluates price change from the consumer's perspective and is an important way to measure changes in purchasing trends and inflation.
How important is the CPI for the investor?
This data is extremely relevant, as the Federal Reserve (Fed) is committed to combating inflation , which erodes the purchasing power of both consumers and investors . The Fed's mission is to keep inflation in line with its target of 2% per year. To achieve this objective and keep inflation under control, the Fed takes measures to reduce the circulation of money in the economy.
How does the Fed reduce inflation?
This is achieved, in part, by encouraging currency holders to hold their resources in Treasury bonds rather than spending them. By doing so, the Fed seeks to control the money supply, which can help stabilize inflation and promote economic stability.
What can we expect with this new data?
This data is in line with the FedWatch tool estimate, which indicates a nearly 70% probability that the policy interest rate will remain unchanged at 5.25%-5.5% in 2023, despite an increase in bond interest rates of the US Treasury.