Key US CPI inflation measures came in cooler than expected in Oct. Headline inflation came in at 0.0% m/m, 3.2% y/y from 0.4% m/m, 3.7% y/y in Sep, as the continued rise in housing and food costs was offset by falling gasoline prices. In comparison, core CPI inflation rose by 0.2% m/m, 4.0% y/y in Oct from 0.3% m/m, 4.1% y/y in Sep. 

Revised US Inflation Outlook: Taking stock of the latest price trajectory, we continue to expect headline inflation to cool towards end 2023 and into 2024. We continue to expect headline CPI inflation to stay at 3.2% by Dec 2023, and this implies headline CPI inflation will average about 4.1% for 2023, and we expect the easing of prices to continue next year, to average 2.0% in 2024. We still expect core inflation to continue to ease but may only reach 3.9% y/y by end-2023 (previous forecast: 3.0%), still well above the Fed’s 2% objective. For the full year, we expect core inflation to average 4.8% in 2023 (previous forecast: 4.7%) and continue to ease to average 2.2% in 2024.