WASHINGTON (AP) — U.S. inflation accelerated in October, driven by higher rents, used cars and airfares, a sign that price increases may be stabilizing after slowing in September to reach their record level. lowest pace since 2021.

Consumer prices increased by 2.6% over one year, the Ministry of Labor announced on Wednesday, compared to 2.4% in September. This is the first increase in annual inflation in seven months. From September to October, prices increased slightly by 0.2%, as in the previous month.

Excluding volatile food and energy costs, “core” prices increased by 3.3% year-on-year, just like in September. From September to October, underlying prices increased by 0.3% for a third consecutive month. Over the long term, at this rate, underlying inflation would exceed the Federal Reserve’s 2% target.

Most economists, however, believe that inflation will eventually resume its slowdown. Consumer inflation, which peaked at 9.1% in 2022, has since fallen steadily, although overall prices remain around 20% higher than they were three years ago.

The price surge Americans bitter about the economy and on the economic management of the Biden-Harris administration and contributed to the defeat of Vice President Kamala Harris in last week’s presidential election.

However, Donald Trump’s victory has sparked uncertainty about the direction inflation could take and the Fed’s reaction if it reaccelerates. Trump has pledged to reduce inflation, primarily by ramping up oil and gas drilling. But mainstream economists have warned that some of his proposals, including his plan to dramatically increase tariffs on imports and continue mass expulsions of migrants, would worsen inflation if fully implemented.

Most of the rise in consumer prices between September and October reflects higher rents and housing costs, a trend that Fed officials expect to ease in the coming months. As a result, the figures released Wednesday could keep the Fed on track to cut its key rate for a third time in December, as its officials have already done. indicated that they probably would.

“Inflation is proving a little stubborn, but it’s not a major problem,” said Ryan Sweet, chief U.S. economist at Oxford Economics, a consultancy. “What I think this means for the Fed is that they can cut rates again in December.”

If it cuts its policy rate again in December by an expected quarter point, Sweet said, the Fed will have cut rates by a full percentage point. He thinks policymakers will then pause to assess the effects of their rate cuts on the economy and inflation.

“A break is coming,” Sweet said. “The direction of interest rates next year is much murkier.”

Stock prices surged following Trump’s election victory, largely due to optimism that his proposed tax cuts and deregulation would boost the economy and corporate profits. But bond yields have also risen, partly reflecting fears of accelerating inflation.

Additionally, the economy is growing faster than many economists predicted earlier this year. It has expanded at an annual rate of almost 3% Over the past six months, consumers, especially those with higher incomes, have been spending freely and fueling growth.

Gas prices fell 0.9% from September to October, helping to contain overall inflation. Prices at the pump have since fallen further on average nationwide, to 3.08 per gallon on Wednesday, according to AAA. That’s down from $3.20 a month ago.

Food prices rose just 0.1% between September and October and just 1.1% over the past year, bringing some relief to consumers after rising around 23 % of food prices over the last three years. Egg prices remain very volatile. They fell 6.4% last month, although they were up more than 30% from a year earlier.

Used car prices jumped 2.7% between September and October alone, after falling sharply for months before. But this spike could turn out to be an anomaly. Car dealerships have mostly restocked their inventories after they were depleted during COVID, and in some cases have had to offer incentives again to attract buyers. Compared to last year, average used car prices are still down 3.4%.

With inflation slowing, some consumers felt some relief. Lessie Owen, who works in sales, said she noticed the drop in gas prices, making it easier for her to pay for her daily commute to work in Washington, DC. And in grocery stores, she said, prices for fruits and vegetables appear to have stabilized.

Owen always has a mortgage rate below 3%, which has helped her finances, and she says she’s always been frugal.

“We take advantage of promotions and discounts and coupons, all of that,” she said.

HAS a press conference Last week, Fed Chairman Jerome Powell expressed confidence that inflation is still moving toward the central bank’s 2% target, although perhaps slowly and unevenly.

Powell also noted that most sources of price pressures are easing, suggesting that inflation is unlikely to accelerate in the coming months. Wages continue to grow and have exceeded prices for a year and a half. But Powell noted that wages are not rising fast enough to spur inflation.

The Fed chair also observed that some sources of rising prices, like auto insurance, reflect changes during the pandemic, such as a surge in car prices that made them more expensive to insure. Such “catch-up inflation,” as he calls it, will likely fade over time.

And a survey released Tuesday by the Federal Reserve Bank of New York finds that consumers expect prices to rise just 2.9% over the next 12 months, the smallest such measure in nearly four years.

Lower inflation expectations are important because when consumers expect more moderate price increases, they are less likely to act in ways that increase inflation, such as speeding up purchases or demanding higher wages to compensate for the increase in prices.

Another potential source of relief for American budgets lies in apartment rents. They are now barely increasing on average nationally, according to real estate company Redfin. Its measure of median rent was just 0.2% higher than a year ago in October, at $1,619, although that figure only reflects rents from new leases.

The government’s measurement of rents is increasing more quickly because it includes existing rents. Many landlords continue to increase their monthly payments to reflect the rising costs of new leases over the past three years.

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