Consumer prices rose at slower rates in October, according to data released Thursday by the Labor Department.
The annual inflation rate fell to 7.7 percent in October from 8.2 percent in September, according to the consumer price index (CPI), a closely watched inflation gauge. Economists expected the annual inflation rate to fall to 7.9 percent, according to consensus projections.
Prices rose 0.4 percent last month alone, according to the CPI, also rising slower than the 0.6 percent monthly increase projected by economists. Without food and energy prices, which are more volatile, the CPI rose just 0.3 percent, the slowest monthly increase since July, and 6.3 percent over the past year.
The October CPI report is an encouraging sign for the U.S. economy as policymakers rush to bring down inflation without causing a recession. While a decline in inflation will not be enough to keep the Federal Reserve from raising rates, it may allow the bank to do so at a slower pace.
Rising prices for shelter, gasoline and food were the biggest contributors to an overall increase in prices last month, with shelter costs alone responsible for roughly half of October inflation.
Shelter makes up roughly 40 percent of the CPI in any given month, giving rents and housing costs major influence over the inflation picture. Even so, economists warn that the CPI for shelter often takes several months to catch up to declines or increases in rents, meaning the true cost of housing could be lower than it appears in the Thursday report.
Food prices also rose at a brisk 0.6 percent pace in October and are up 10.9 percent over the past year, but the pace of food price growth has fallen off since the start of 2022. Grocery prices also rose 0.4 percent in October, down from a 0.7 percent gain in September.
American households may have seen some relief from a steep drop in prices for used cars and trucks, which fell 2.4 percent last month alone. Apparel prices fell 0.7 percent, and energy services fell 1.2 percent on the month thanks to a 4.6 percent plunge in piped gas service. Gasoline prices, however, rose 4.4 percent on the month.
Updated at 9:10 a.m.