By Geoffrey Smith
Investing.com -- The annual rate of inflation in the U.S. fell by more than expected in October, indicating that the worst of the post-pandemic price spike is over and bolstering hopes of an early end to the current cycle of interest rate increases.
Consumer prices rose 7.7% from a year earlier, down from 8.2% in September and clearly below the 8.0% consensus forecast. The current dynamic in prices also eased more than expected. with overall prices rising only 0.4% on the month, down from 0.6% in September, and core prices - which strip out volatile food and energy elements - rising 0.3%, rather than the 0.5% expected.
The headline rate of inflation has now fallen for four months in a row, from a peak of 9.1% in June. At 7.7%, it's now at its lowest rate since January.
Financial markets reacted strongly to the news, pricing in an earlier and lower end to the Federal Reserve's monetary policy tightening. The dollar index fell nearly 1.5% before bouncing to trade at 109.18, down 1.2% on the day. S&P 500 Futures meanwhile rose by 2.9%, and Nasdaq 100 Futures rose nearly 3.7%.