The US October CPI will be released tonight: Core inflation is expected to remain strong, while overall inflation is expected to rise.

The US October CPI data will be released on Wednesday night. Market participants predict that this latest data will show that core inflation has remained strong for the third consecutive month, and the pace of future rate cuts by the Federal Reserve will also be a point of contention. The market currently expects the year-on-year increase in US October CPI to be 2.6%, higher than September's 2.4% increase; the month-on-month increase is expected to be 0.2%, unchanged from the previous value. The year-on-year increase in core CPI excluding food and energy items is expected to be 3.3%, unchanged from the previous value; the month-on-month increase is expected to be 0.3%, also unchanged from the previous value. Economist Scott Johnson said, "The US October CPI data may weaken expectations of a December rate cut by the Federal Reserve. Bloomberg Economics' real-time forecasts indicate that there is upside risk in the overall inflation month-on-month index, while core inflation seems poised to remain relatively high." If US October CPI data comes in lower than expected, it indicates that overall inflation is manageable, and US bond yields and the US dollar may come under pressure; if CPI data shows an unexpected rebound, or triggers concerns in the market about a resurgence of high inflation, future rate cuts may be hindered, and US bond yields and the US dollar may continue to rise. Several key components of this upcoming inflation data are worth paying attention to. First is rental prices. Owner equivalent rent (OER) is the largest single component of the CPI, and is crucial in determining the underlying trend of the index. OER inflation accelerated in July and August - causing concerns that the slowdown in inflation in the first half of the year may reverse, and then slowed down again in September. Economists at Morgan Stanley led by Diego Anzoategui believe that OER may see a slight increase again in October, before resuming its downward trend. They said, "September's OER may have been affected by seasonal factors causing it to decline, but we do not expect a similar deviation this time." "However, our leading indicators in the model - new lease and renewal inflation - are still weaker than the housing CPI, indicating continued deceleration in the future." Second is hotel prices. Even if rental inflation remains stable, hotel prices are expected to be affected by hurricanes, which could lead to a significant increase in the category of prices for lodging away from home in the CPI. Analysts also point out that the US Bureau of Labor Statistics has seasonally adjusted this item to account for the slowdown in business after the peak summer travel season, meaning that unadjusted prices must decrease significantly to show a decrease in the seasonally adjusted price readings. Economists at Barclays Bank, Pooja Sriram and Marc Giannoni, said, "Based on high-frequency data on average home prices, we predict that prices for lodging away from home will rise." "CoStar's weekly reports show that demand and occupancy rates in the Southeast were higher in October due to displacement caused by hurricanes. At the same time, one must also consider the seasonal factors that may have made people hesitate in October." Also worth noting are prices for used cars. Hurricanes could also have pushed up prices for used cars, one of the most significant categories in the CPI index. Over the past 16 months, price declines in this category have helped lower overall core commodity prices in 14 of those months. Prices of core commodities excluding used cars have been mixed, with declines in 9 out of the past 16 months. Economists at Wells Fargo, Sarah House and Aubrey Woessner, said, "The recent rebound in used car auction prices suggests that the CPI for used cars may see the largest monthly increase in about a year." "We still believe that the benefits from a smoother supply chain and weaker demand have not fully materialized yet, but the deflationary impulse for new and used cars may fade in the last few months of the year, particularly as the destruction caused by hurricanes has driven demand for replacement vehicles and parts."