Right before the election, inflation rose to 2.6 percent annual rate

Inflation rose modestly in the lead-up to last week’s presidential election, when voters signaled unhappiness with the economy by voting out incumbents.

The consumer price index increased by 2.6 percent in October from a year earlier, according to the Labor Department, in line with economists’ expectations and hotter than a 2.4 percent rise in September.

Prices grew by just 0.2 percent between September and October, which was the same pace as in each of the three previous months. The bulk of October’s monthly increase was driven by a rise in shelter costs, which were up 0.4 percent last month and grew by 4.9 percent annually.

Prices for used cars and trucks, airline fares and medical care also increased in October. Hurricane-triggered destruction of property typically leads to an increase in used auto prices. A warm fall also helped fuel a 1.2 percent rise in electricity prices.

Gasoline continued its third straight monthly price decline and has fallen in five of the past six months.

Core prices, which are stripped of volatile food and energy prices to better reflect underlying inflation trends, were up 3.3 percent from a year ago and up 0.3 percent on a monthly basis. Both figures were unchanged from September.

Egg prices dropped 6.4 percent after rising the two previous months. Still, they are up 30.4 percent over the past year.

The recent run-up in prices has weighed on the hearts, minds and pocketbooks of Americans for years, but political leaders got an unexpected heavy dose of inflation anger just last week, as Republicans took the White House, the Senate and possibly the House. Three in 10 voters—including 6 in 10 voters for Donald Trump—said they were “falling behind” financially, a 50 percent increase from 2020, according to AP VoteCast exit polls.

While inflation has eased throughout most of 2024, especially for gasoline, overall prices remain much higher than in 2019. And prices for some important everyday necessities for Americans, including house prices, rent and child care, remain elevated. Despite these increases, September’s annual rate of 2.4 percent was the lowest since February 2021.

The latest consumer price index, the most widely used gauge of inflation, could inform policymakers’ decisions on how much more to cut interest rates following two consecutive cuts. Federal Reserve Chair Jerome H. Powell, speaking to reporters last week, left the door open to another rate cut at the final policy meeting for the Fed this year in December.

Shelter and services prices remain an issue but are likely insufficient to deter the Fed from moving forward with another rate cut at its next meeting, said Joe Brusuelas, chief economist at RSM.

The Fed’s benchmark rate now sits between 4.50 and 4.75 percent. Interest rate cuts trickle through the financial sector to make an array of consumer and business loans cheaper.

In his remarks last week, Powell dismissed most questions about Trump’s win, saying that “in the near term, the election will have no effects on our policy decisions.”

Trump’s campaign vows to impose tariffs on U.S. imports, deport undocumented immigrants and renew expiring tax cuts could put upward pressure on inflation depending on how they are implemented, economists say. They could also expand federal deficits.

Recent data has shown signs of economic strength, with promising growth, consumer spending and unemployment figures. But there are also warning signs: The economy picked up just 12,000 jobs in October, the slowest pace in nearly four years, as a labor market cool down was exacerbated by major hurricanes and labor strikes.

Another important gauge of inflation comes with Thursday’s release of the producer price index.