Inflation rose as voters cast their ballots, but price increases for many basic assets remained stable

Price growth accelerated in October as voters began casting ballots in a presidential election dominated by economic concerns.

The consumer price index rose to 2.6% last month on a 2.6-month basis, the Bureau of Labor Statistics reported Wednesday. That's slightly higher than the 2.4% rate in September, which was the slowest rate since President Joe Biden's first full month in office.

“Core inflation,” a measure that excludes volatile food and energy prices, remained at 3.3% in the 12 months to October, the same level as the previous month.

Markets reacted positively to the report as it allayed some concerns about a stronger-than-expected reading. Stock futures rose as traders pushed up the price of Treasury bonds.

Still, there are signs that progress in reducing inflation has stalled. According to the BLS, essential housing costs rose 0.4% from September to October, accounting for more than half of the monthly increases. This category is still 4.9% more expensive than at the same time a year ago.

Last week, voters vented their frustration over the cost of living by returning President-elect Donald Trump to the White House and Republicans to the Senate.

Over the last four years, prices have risen by about 20% cumulatively, with the costs of many other goods and services rising even faster. While average wage gains continue to outpace price increases and some households are doing better than before the pandemic, increased spending on everything from child care to home insurance has left many consumers fed up and looking for a change.

Food costs rose 0.2% in October, less than the 0.4% monthly increase in September, with eggs and dairy still seeing price increases, the BLS said. Used car costs rose 2.7% last month, while new car prices were flat and clothing prices fell 1.5%.

Analysts had expected a rise in used car prices and hotel costs, which rose 0.4% after the hurricanes that ripped through the Southeast this fall, reversing a 1.9% decline in September.

Overall, however, the economy remains strong as President-elect Donald Trump prepares to retake the Oval Office. Many employers continue to hire, and strong retail sales and rising consumer confidence signal that households are willing to spend despite ongoing cost pressures.

The October consumer price index provides a snapshot of the climate in which voters cast their ballots. Many did so out of nostalgia for the economy that prevailed during the first Trump administration, election polls show. But it is not clear whether Trump will be able to repeat the steady growth and low inflation of before the Covid outbreak, and many economists have warned that the platform he built on this year Inflation would worsen if implemented.

Investors have already started selling Treasury bonds over the past week because they believe Trump's proposals, as well as his plans for significantly higher tariffs and deeper tax cuts, could trigger another round of price increases. When investors expect overall prices to rise, they sell bonds because their fixed payments lose value over time.

This sell-off, in turn, has caused other borrowing costs, such as B. Mortgage interest rates have risen again despite the Federal Reserve's continued interest rate cuts.

At his news conference last week where he announced a quarter-point rate cut, Fed Chairman Jerome Powell warned of further “disturbances” on the path back to the central bank's 2% inflation target. He declined to address what impact Trump's policies might have, but indicated he would not resign his post. Trump has said he wants unprecedented influence over Fed policy, which many analysts say could threaten the central bank's longstanding independence.

Inflation in other important consumer goods remains subdued for the time being. Gasoline prices are about 30 cents lower than a year ago, while a report from Adobe Insights on Tuesday showed a significant decline in online grocery prices over the past year, something not seen since January 2020.

Not all economists believe inflation will rise again under the next administration, and some business leaders don't believe Trump will be able to implement the measures he promised. Others are already taking precautions after experiencing his first round of economic policies.

Estimates of the potential costs the tariff proposal could incur to consumers varied, ranging from up to $7,600 per U.S. household, according to the National Retail Federation, to $1,700 for middle-income households, according to the pro-business Peterson Institute for International Economics.

Analysts at Citi Financial Group say the cost increases caused by tariffs could ultimately represent only a one-time price increase of up to 2% across the economy.

However, they said such an outcome is far from guaranteed.

“While measures such as tariffs would likely lead to stronger inflation in a few months, the overall magnitude and timing of the impact of various measures on inflation is still highly uncertain,” the analysts wrote in a note this week.