Consumer Inflation Figures Tame Investor Fears

A week after the employment figures put fear in investors over potential rate hikes, the Bureau of Labor Statistics cooled those fears with its CPI report, which detailed lower-than-expected inflation. At the start of last week, the International Monetary Fund curtailed its global growth forecast, citing trade tensions between the U.S. and its trading partners as a threat to economic growth. October’s preliminary Consumer Sentiment Survey was also released last week and featured slightly lower consumer confidence in the economy.

• The prime measure for consumer inflation came in below expert estimates in September.  The Consumer Price Index, published by the Bureau of Labor Statistics, shows that core inflation, excluding volatile food and energy costs, grew 0.1% from one month prior and 2.2% from twelve months ago. Economists expected 0.2% and 2.3% respectively. The cool inflation figures eased some investor concerns regarding interest rate hikes that came about following the unemployment report for September.

• The International Monetary Fund, a global organization designated to foster global monetary and financial security and stability, cut its global growth forecast for 2018. The group initially predicted a global rate of 3.9%, but trade tensions between the U.S. and other countries prompted the group to cut its forecast to 3.7%. The group cites impacts to trade policy as a potential disruptor to global supply chains and says that growth in emerging markets is more at risk than in developed nations.

​

• The preliminary October edition of the University of Michigan’s Consumer Sentiment Survey revealed consumer’s confidence in the economy dropped slightly from September’s results. The survey showed that consumer sentiment fell to 99.0 in October from 100.1 at the end of September. However, confidence levels are still very high despite the decline. Consumer incomes are rising, which is keeping the confidence afloat, but year-ahead expected inflation is weakening real income expectations and weighing on confidence.