No CPI Yet, But the Clues Are Clear

• EIA data showed gas prices dropped 2.2% year-over-year in October.

• NAR data shows house price growth contracted month-over-month.

• Fed survey data point to a drop in prices received.

Inflation growth slowed in October…

This past weekend brought signs of progress in Washington, D.C. Senators from both parties appear to have found a path forward to reopen the government. That means we should soon start seeing updates from key agencies like the U.S. Bureau of Labor Statistics.

The Consumer Price Index (“CPI”) for October was originally scheduled for release this Thursday. But even if Congress reaches a deal in the next few days, it may still take time for the data to flow. Since the numbers were supposed to drop this week, now’s as good a time as any to for my monthly check in on a few indicators I track that shape the direction of price growth.

According to the Federal Reserve Bank of Cleveland, annualized inflation is expected to hold steady at 3% for October…

Well, based on the data I follow, inflation growth likely eased last month. And while the annual pace may still sit above the Fed’s 2% target, it’s unlikely to derail the central bank’s path toward a rate cut by year-end. That should help support a steady, long-term rally in the S&P 500 Index.

But don’t take my word for it, let’s look at what the data’s telling us…

Gas Prices

One of the first places I look when gauging inflation is gasoline. It’s a line item that hits most of our wallets, as fuel in the tank lets us live our lives.

The chart below shows the Energy Information Administration’s (“EIA”) monthly gasoline price data, covering all grades. I use this broader measure because not everyone buys the same type of fuel. Looking at the full picture gives a better sense of how price changes affect everyone’s budget, not just one group.

Gas prices eased in October versus last year. The average cost per gallon was $3.19, down from $3.26 in October 2024, a 2.2% decline…

Historically, gas prices rise in early spring, peak in April, and then gradually ease through the rest of the year. For most of 2025, prices have been under pressure compared to 12 months ago. But notice the pace of contraction had been slowing—until October. A 2.2% year-over-year drop is softer than the 12% plunge in April and May, but steeper than the 1.3% dip in September. That’s an acceleration to the downside.

Why does that matter? Because gas prices tend to lead headline CPI. If costs are rising elsewhere due to tariffs, this downdraft should help keep a lid on overall price growth. Still, the benefit won’t be as strong as it was in spring and early summer.

Prices Received

This next chart is a gauge I built using monthly manufacturing and services index data from regional Fed banks. They ask businesses whether activity is rising, falling, or holding steady, and then publish indexes to measure the change.

I’ve combined data from Dallas, Kansas City, New York, and Philadelphia. Together, these regions account for about 32% of national economic output. For this chart, I focused on prices received, a proxy for CPI. October marked the second straight monthly pullback. That hasn’t happened since late last year, when inflation growth was cooling…

I weighted the mix to 65% services and 35% manufacturing to reflect CPI composition. The October reading came in at 18.9, down from 21.4 in September. That’s more in line with spring levels. Back then, monthly inflation growth held steady around 0.2%. So, I wouldn’t be surprised to see something in the 0.1% to 0.2% range for October.

House Prices

As I’ve been saying, house price growth is slowing—and that matters. Shelter accounts for 35% of CPI. Owners’ equivalent rent makes up 26%, while rent of primary residence adds another 7.5%. So, housing plays a big role.

The latest data from the National Association of Realtors (“NAR”) shows continued easing in existing home price growth…

In September, the median existing home price was just over $415,000, a 2% year-over-year increase. That’s similar to August, but well below the typical 7%+ gains seen in prior years. On a month-over-month basis, prices fell 2%.

Zooming out, the trend is clear. This marks the seventh straight month of sub-3% annualized price growth. We haven’t seen that since early 2023, when the Fed first signaled it would slow rate hikes. That should also help keep a lid on runaway prices.

Bringing It All Together

The Fed’s dual mandate is clear: stable prices and maximum employment. In short, it uses monetary policy to keep inflation in check while encouraging hiring.

Over the past few months, employment data has shown a sharp slowdown. Based on private market data released last week, that trend hasn’t changed.

If CPI growth for October lands at 0.2% month-over-month, the six-month annualized pace will continue to ease—dropping to 2.9% from 3.2% in September and a recent peak of 4.4%. Based on historical patterns, we should see further deceleration into early next year…

So yes, the annual pace may still sit above the Fed’s 2% target. But the underlying components suggest inflation is steady. And if labor market momentum keeps cooling, inflation growth may be the least of the Fed’s worries. That should give policymakers plenty of room to keep easing rates—supporting economic growth and a steady rally in the S&P 500.

Five Stories Moving the Market:

The record-breaking U.S. government shutdown is nearing an end after a group of moderate Senate Democrats agreed to support a deal to reopen the government and fund some departments and agencies for the next year – Bloomberg. (Why you should care – the two sides are working on an agreement to keep the government funded through next September 30)

China has suspended a ban on approving exports of "dual-use items" related to gallium, germanium, antimony and super-hard materials to the U.S., according to the commerce ministry; Beijing also announced late last week that the suspension of other export controls imposed on October 9, including expanded curbs on certain rare earth materials and lithium battery materials – Reuters. (Why you should care – the ban has been lifted through November 26, 2026, and shows a commitment to the recent agreement between Presidents Donald Trump and Xi Jinping to ease tariffs and trade restrictions)

Federal Reserve Bank of New York President John Williams said financial strain among lower and middle-income Americans could threaten the U.S. economy’s resilience, even as wealthier households benefit from a stock market boom – Bloomberg. (Why you should care – the comments lean in the direction of additional interest rate cuts to support the growth outlook)

Nvidia CEO Jensen Huang said the semiconductor giant is experiencing "very strong demand" for its state-of-the-art Blackwell chips; he said SK Hynix, Samsung, and Micron have all scaled up tremendous capacity to support Nvidia – Reuters. (Why you should care – SK Hynix and Micron have said High Bandwidth Memory, which supports ultra-fast data transfer, is also seeing strong demand)

Visa and Mastercard are nearing a settlement with merchants that aims to end a 20-year-old legal dispute by lowering fees stores pay and giving them more power to reject certain credit cards – WSJ. (Why you should care – the deal is also likely to limit any surcharges by merchants to recapture interchange fees)

Economic Calendar:

Earnings: IPG, OXY, TSN

China – CPI, PPI for October

BOJ Summary of Opinions

BOJ’s Nakagawa (Board Member) Speaks

Japan – Leading Index for September

Eurozone – Sentix Investor Confidence for November (4:30 a.m.)

U.S. – Wholesale Inventories, Trade Sales for August (10:00 a.m.)

Treasury Auctions $86 Billion in 13-Week Bills (11:30 a.m.)

Treasury Auctions $77 Billion in 26-Week Bills (11:30 a.m.)

Treasury Auctions $58 Billion in 3-Year Notes (1:00 p.m.)