Tuesday inflation report could provide first snapshot of prices since midterm elections

A limited view of inflation

The report will cover prices in October, but it cannot show how they compare with October a year earlier. The Bureau of Labor Statistics did not release an inflation report last October because of the government shutdown, leaving that annual calculation unavailable.

Economists forecast that inflation slowed from September to October on a monthly basis. The missing annual measure is typically watched closely, making the report a less complete gauge of price changes.

Fuel prices shape the picture

Gasoline contributed substantially to recent inflation. In September, fuel prices climbed more than 9% from August and accounted for over half of that month’s overall price increase, according to the BLS.

Oil prices have cooled since the midterm elections, putting downward pressure on gasoline. GasBuddy data showed the national average was under $4 per gallon on Monday, but that recent relief will not be captured in Tuesday’s report because it covers October.

Jobs and rate decisions

Employers added 165,000 jobs in October, BLS data showed. That was well above the average monthly gain of 48,000 over the previous year, according to the agency, and followed a stronger-than-expected jobs report last week.

Inflation and a resilient labor market led the Federal Reserve to raise rates by a quarter of a percentage point in September. The increase was intended to cool prices by slowing economic activity and demand, though the effects of such moves can take several months to emerge.

December hike remains possible

Policymakers are considering whether current rates are high enough to curb price increases. Market expectations put the chance of a quarter-point increase at the Fed’s next meeting at about 82%, according to CME Group’s FedWatch Tool. A rate increase in December would be the second in four months, after the Fed went three years without raising rates. At a press conference in Washington, D.C., Warsh said, “It’s our responsibility to get inflation down.”