Inflation is still lingering, pushing many investors into gold bullion this quarter.

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According to a Bureau of Labor Statistics released last week, the consumer price index (CPI) grew by 0.4% month-over-month (MoM) and 7.7% year-over-year (YoY) in October. That figure is lower than the Dow Jones estimated CPI increase of 0.4% MoM and 7.9% YoY.

Core CPI, which excludes energy and food costs, jumped 0.3% MoM and 7.9% YoY in October, lower than the respective Dow Jones estimates of 0.5% and 6.5%.

Major price declines were discovered in the used car market, apparel, and healthcare sectors, which were significant contributors to October’s slowing inflation. Prices fell 2.4%, 0.7%, and 0.6% MoM, respectively.

The cost of shelter, a metric that makes up one-third of CPI figures, grew by 0.8% MoM and 6.9% YoY. It is the steepest monthly increase since 1990 and the highest yearly level since 1982. 

The food price index also rose in October, hitting 0.6% MoM and 10.9% YoY.

Producer Price Index Increased by 0.2% in October, Lower than Expected

The Producer Price Index (PPI), which calculates the prices companies pay for finished goods, came in lower than the Dow Jones estimate of 0.4% month-over-month (MoM).

According to the Bureau of Labor Statistics, wholesale prices rose in October by 0.2% MoM and 8% year-over-year (YoY).

Excluding energy, food, and trade services, PPI grew 0.2 % MoM and 5.4% YoY.

The lower-than-expected PPI rate has caused many investors to perceive that inflation might have peaked. These numbers should encourage the Fed to pivot away from increasing rates even further. 

On the other hand, other investors believe that the inflation decrease was due to lower fuel prices achieved through the release of a large amount of oil from the country’s Strategic Petroleum Reserve (SPR). Since the SPR current levels are extremely low, it is believed that energy supplies will tighten even further and increase prices.

But further indications point to higher inflation rates in the near future.

NY Fed Survey Expects Higher Inflation Rates Due to Rising Gas Prices

In the US, Americans are growing more concerned about higher prices.

According to the New York Fed Survey of Consumer Expectations, inflation expectations for 2023 grew by 5.9%. That is more than the half a percent recorded in September.

The three-year and five-year expectations for inflation rose by 3.1% and 2.4%, respectively.

The concern for many Americans is rooted in the fear of rising gas prices at the pump. Respondents believe that gas prices will rise by 4.8% next year.

Due to the higher cost of living, Americans are depleting their savings and retirement accounts. Many are turning to credit cards and other forms of loan options to pay for goods and services.

US Household Debt Increased at Highest Rate in 15 Years

According to the Federal Reserve, household debt in the US recently rose at the fastest pace in 15 years.

Americans are using more credit cards to make ends meet as they struggle with rising inflation and lagging salaries. 

Credit card balances grew to more than 15% year-over-year, which is the highest increase in more than 20 years.

The total amount of debt in American households reached $351 billion for the 3rd quarter, the largest jump in debt since 2007. The total amount of debt owed collectively in the US is a record $16.5 trillion.

The major contributors to debt originated from mortgage and credit card balances which rose to $11.7 trillion and $930 billion, respectively.

Friday, gold dropped 0.48% to $1,759.40 per ounce. Silver fell 0.02% to $21.13 per ounce. Platinum decreased by 0.71% to $992.40 per ounce, while Palladium sank by 3.08% to $1,985.00 per ounce. Bitcoin dipped 2.37% to $16,571.50.

Do you think inflation will continue to rise in 2023? Or will we face a deflationary period soon?

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