The core U.S. Consumer Price Index (CPI), an indicator of inflation, increased by 0.22% month-over-month in October, coming in much stronger than the 0.14% average so far this year. This puts year-over-year inflation numbers at about 1.8%, much closer to the Federal Reserve's targeted 2%, which should continue to give the Fed the freedom to gently raising the Fed Funds Rate as planned.
There are a few main industries that are contributing to the recent increases. Rents continue to tick up especially outside of the largest cities. The excess supply of housing is much tighter now plus low unemployment is helping to support home prices. Medical inflation has started to creep back up again after a slow start to the year. Lastly, car prices have ticked up as well.
While we're not seeing a major deviation from where we expected to be, staying close to the targeted 2% CPI inflation numbers keeps economic factors in line with the Federal Reserve expectations. This gives us confidence that the Fed will continue to carry out their goals in a timely fashion throughout the rest of the year and well into 2018.