A key indicator of U.S. inflation grew by a lower-than-expected number in October, its lowest annual increase since January, sending the Nasdaq Composite soaring by 5% at one point Thursday morning. File Photo by John Angelillo/UPI | License Photo
Nov. 10 (UPI) -- A key indicator of U.S. inflation grew by a lower-than-expected number in October, its lowest annual increase since January, sending American markets soaring on Thursday morning.
The Consumer Price Index increased by 7.7% in October over the previous year, according to a monthly report from the U.S. Bureau of Labor and Statistics.
Economists had predicted an increase of 7.9%.
October saw the lowest year-over-year increase since January and could signal progress in the ongoing fight against rising inflation. The CPI climbed by 8.2% in September.
The index measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, excluding volatile food and fuel prices. The CPI is also a key tool used to measure inflation.
"That's (rate) obviously still very high," Andrew Hunter, a senior economist at Capital Economics, told NBC on Thursday.
"But at least it's a move in the right direction."
The CPI increased 9.1% in June, its biggest gain during the COVID-19 pandemic era.
Markets were up on the news Thursday morning as investors hope the news equates to a slowdown in the U.S. Federal Reserve's interest rate hikes. The Fed has repeatedly upped the benchmark interest rate by 0.75 percentage point in its quest to curb inflation.
The Nasdaq Composite had climbed 518.92 points or 5.01% as of 10:55 a.m. EST. The Dow Jones Industrial Average climbed 774.45 points or 2.38% at the same time, while the S&P 500 gained 145.39 points or 3.88%.
"Today's report shows that we are making progress on bringing inflation down, without giving up all of the progress we have made on economic growth and job creation. My economic plan is showing results, and the American people can see that we are facing global economic challenges from a position of strength," President Joe Biden said in a statement issued Thursday morning.
"It will take time to get inflation back to normal levels -- and we could see setbacks along the way -- but we will keep at it and help families with the cost of living. Americans are already paying around $1.20 less per gallon of gas than this summer. Today's report shows a much-needed break in inflation at the grocery store as we head into the holidays."