Consumer price inflation surprised consensus expectations to the downside, with the headline CPI coming in flat MoM in October, down from 0.4% in September, as gasoline prices were a large drag on inflation this month. Prices in the core segment also came in much weaker than anticipated, printing 0.2% MoM. The CPI's ‘supercore’ decelerated to its lowest pace in three months at 0.2% MoM, as good prices came in broadly weaker in October.

Today's CPI report should be a welcome relief for Fed officials: output has been advancing at a firm pace, but price pressures have continued to ebb. This should allow the Fed to be more patient in waiting for the economy to settle down at a slower pace of growth. 

Today's data also supports our long-held view that the Fed is likely done with rate increases, and we continue to look for a first rate cut in June 2024.