U.S. inflation shows signs of easing with core PCE seeing lowest annual gain since April 2021

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U.S. inflation shows signs of easing with core PCE seeing lowest annual gain since April 2021

The United States Commerce Department has revealed encouraging signs of easing inflation, with the core personal consumption expenditures (PCE) price index recording its lowest annual gain since April 2021. The core PCE, which strips out volatile food and energy prices, rose by a modest 0.2% in October and has seen an annual increase of 3.5%. This development is a positive step towards the Federal Reserve's long-term inflation target of 2%.

The comprehensive PCE index, which includes food and gas, remained unchanged from September to October but showed an annual climb of 3%. The report also noted a considerable slowdown in consumer spending in October, with expenditures increasing by just 0.2%, a stark contrast to September's more robust growth of 0.7%.

A Federal Reserve survey published on Wednesday indicated a general economic slowdown and more moderate job market conditions. Despite this, the Fed's strategy seems to be working, as the economy moves closer to the desired 2% inflation rate without tipping into recession, a scenario often referred to as a "soft landing."

The latest data also reveal mixed signals in the labor market, with initial jobless claims coming in below forecasts, yet continuing claims reaching their highest since late November of the previous year. Inflation trends are being closely monitored, especially after the Federal Reserve brought interest rates to their highest level in two decades.

Analysts and futures traders are now keenly awaiting the Federal Reserve's next moves. According to CME Group (NASDAQ: CME ) data analysis, there is a heavy betting in the futures market on the Fed maintaining interest rates during their upcoming session in mid-December.

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