US CPI Data: Will October inflation numbers throw a surprise for the markets today?

The US Bureau of Labor Statistics will publish the US CPI data for October today. For investors globally, US CPI data is one of the most closely tracked economic indicators.

The US Federal Reserve has been raising interest rates to contain inflation and maintained rates at 5.25 and 5.50 percent for 14 months. Now that inflation appears to be under control, the Fed has dropped interest rates by 75 basis points. First, in September, the Fed cut the rate by 50 bps and then 25bps in November’s FOMC meeting.

Fed has started a rate cut campaign as inflation has been on its way down.

US inflation has dropped from a peak of 9.1% in June 2022 to 2.4% in September 2024 — the lowest level since February 2021. However, last month the surprise for the markets was the annual core consumer price inflation rate in the United States, which excludes items such as food and energy. The core inflation in September edged higher to 3.3% from the three-year low of 3.2% recorded in the two previous months.

The US inflation data for October will be released on November 13, 2024, at 8.30 a.m. Eastern Time or 7 p.m. Indian Standard Time (IST). The October Consumer Price Index will be released on Wednesday, followed by the Producer Price Index and weekly jobless claims on Thursday and retail sales data on Friday.

Market experts expect stable annual core inflation at 3.3% in US October CPI data, with potential upside risks from pro-growth fiscal policies, tariffs, and immigration changes. The markets may be surprised if core inflation or headline inflation exhibits a significant upward spike.

Also, US Fed’s chair Powell and the FOMC members could be in a fix now. After Trump’s victory, market voices are being heard about inflation making a comeback. Trump’s policies on tax cuts and imposing tariffs could turn out to be inflationary thus impending Fed’s rate cut campaign.

Moving into 2025, markets expect the US Fed to go slow on cutting rates and may even take a breather before further rate cuts.

Meanwhile, S&P 500 and Nasdaq 100 are up nearly 36% and Dow 30 is up by 29% over the last 12 months. How the Santa Clause rally in 2024 unfolds remains to be seen before Trump takes oath as the 47th President of the United States of America on January 20, 2025.