Last month’s decline in gasoline prices aided in driving US inflation to its lowest level since July.

According to the Labor Department, prices rose 3.2% in the year to October.

This was down from 3.7% the previous month.

Housing costs continued to rise, but overall price pressures were less than projected, indicating that the country’s war against inflation may be nearing an end.

The price index, which monitors the prices of a basket of goods, remained steady from September to October. Taking out food and energy prices, which tend to fluctuate and obscure larger patterns, prices grew by 0.2%, lowering from the previous month.

Following the announcement, stocks jumped as investors gambled the US Federal Reserve will not need to do more to cool the economy and curb inflation.

Since last year, the Federal Reserve has boosted interest rates dramatically in order to stabilize prices, which were rising at the highest rate in decades.

According to analysts, the comparatively weak price increases make the US Federal Reserve less likely to boost borrowing costs again.

In October, US job growth slowed more than predicted.
“The continued moderation of inflation will help keep the Federal Reserve on the sidelines,” said Greg McBride, chief financial analyst at Bankrate.com.

According to the Labor Department, gasoline prices have dropped more than 5% since last year, with a further drop from September to October. The cost of new and secondhand vehicles and trucks has also decreased.

However, Mr McBride stated that problems remain, citing housing expenses, which have risen 6.7% in the previous year.

According to the Labor Department, housing costs accounted for more than 70% of inflation last month.

“The slower pace of inflation is little comfort to households still dealing with the cumulative effect of rising prices,” the economist said. “The strain on household budgets is real with the consumer price index up more than 18% in the past three years.”

Unlike in the United Kingdom, housing prices are significantly weighted in US inflation calculations. Rents, hotel rates, and household insurance are among the products tracked by the price index.

Prices for homes are not provided. However, the index takes into account a notional value known as “owners’ equivalent rent,” which is intended to estimate what homeowners would have to pay to rent a comparable space.

For months, analysts have predicted that housing costs would begin to fall, pointing out that official inflation data, which measures what households pay, lags the market because leases tend to lock in rates.

Rent rises in the private sector, which are based on new leases, have stabilized or even fallen as a flood of new flats became available following a significant jump in rents during the pandemic.

According to analysts, the price index has taken longer than planned to reflect market changes. However, they find indicators that it is happening now, noting that the annual increase in shelter prices has slowed significantly since April.

“Things are moving in the right direction,” said Orphe Divounguy, senior economist at Zillow, adding that he expected rents to rise at the 3-5% yearly rate seen prior to the epidemic. “The rental market has somewhat normalised.”

However, building has recently slowed due to rising borrowing rates.

Wells Fargo economist Sarah House predicted that housing cost hikes will reduce in the following months, but she cautioned that “the steady rate of primary rent inflation cautions that the slowdown might not be as sharp as private sector measures have implied.”