One chart provides the inflation breakdown for October 2024.

• In October 2024, the consumer price index increased by 2.6% compared to the same month the previous year, according to the Bureau of Labor Statistics, which is higher than the 2.4% increase seen in September.
• Despite a decrease in gasoline prices and low grocery inflation, CPI housing inflation remains persistently high, while auto insurance remains inflated in other categories.
• If President-elect Donald Trump's policies are implemented, they may lead to inflation, according to economists.

Despite lower gasoline prices and moderation in other consumer staples, progress in taming pandemic-era inflation in October appears to have stalled out.

If President-elect Donald Trump's import tariffs are enacted, economists believe it will increase the inflation rate, which has not yet reached policymakers' desired level.

In October, the consumer price index, a crucial inflation indicator, rose by 2.6% compared to the previous year, surpassing the 2.4% increase recorded in September, as reported by the Bureau of Labor Statistics on Wednesday. This reading was in accordance with the predictions of economists.

Despite the October uptick appearing as a setback, economists and policymakers noted that broad price pressures are still easing.

Last week, Jerome Powell, the U.S. Federal Reserve Chair, stated that economic indicators suggest inflation will gradually decrease, but the path may be uneven.

Powell stated during a press conference that a few good or bad data months won't significantly alter the current pattern.

Stephen Brown, Capital Economics' deputy chief North American economist, agreed with the sentiment: "The overall inflation trend is positive."

The increase in the annual inflation rate can be attributed to a statistical anomaly: The October 2024 inflation rate appears higher than the previous year due to a low monthly inflation rate in October 2023, according to economists.

'Lagged impacts' create trouble spots

The rate of inflation has decreased significantly from its peak of 9.1% during the pandemic in June 2022.

However, there are still some trouble spots.

According to CPI data, auto insurance prices have increased by 14% since October 2023.

Retirees' credit card debt is on the rise.

Brown stated that vehicle insurance premiums are experiencing "upward pressure" mainly because of a residual effect from previous inflationary trends.

Due to the surge in new and used vehicle prices in 2021, caused by a shortage of semiconductor chips, insurers are experiencing higher costs to replace vehicles after accidents, according to Brown. Additionally, insurers must obtain approval from regulators before raising consumer premiums, which can be a time-consuming process.

Brown stated that inflation progress is slow due to the lagged effects impacting other categories.

Housing is the 'major impediment'

The largest CPI category, housing, is a significant example of the lag.

Despite a decline in national rental market inflation, shelter inflation has increased at a slow rate, according to economists.

During the press conference, Powell stated that newly signed leases and market rents are experiencing minimal inflation.

The slow adjustment of shelter inflation to the housing backdrop is intentional due to the way federal statisticians calculate the CPI index.

"Powell stated that the issue is merely a matter of catching up, and does not accurately represent current inflationary pressures."

In October, the CPI shelter inflation rate increased from 0.2% in September to 0.4%, while its annual inflation rate decreased from a high of over 8% in early 2023 to less than 5%.

Mark Zandi, Moody's chief economist, stated that "shelter remains a significant obstacle to achieving full inflation recovery."

The Federal Reserve has an long-term annual inflation target around 2%.

Where consumers saw some relief in October

In October, consumers experienced some relief at both the grocery store and the gas pump.

Since October 2023, grocery prices have increased by about 1%. However, the rate of inflation for groceries decreased from 0.4% in September to 0.1% in October.

They're "very, very tame," Zandi said.

Although supply-and-demand fluctuations can increase the prices of certain foods, such as avian flu causing a 30% increase in egg prices and a poor orange crop resulting in a 7% annual increase in orange prices.

During the month, the cost of gasoline decreased by 1%, according to CPI statistics. In the past year, prices have dropped by more than 12%.

Zandi stated that gasoline prices have significantly decreased and could potentially drop even further, below $3 a gallon. According to the U.S. Energy Information Administration, the average price of gasoline was $3.05 a gallon on November 11.

Global oil prices being soft could provide more relief there, according to Zandi.

According to Zandi, the weakness in anticipation of President-elect Donald Trump's proposed policies around China may include tariffs of at least 60% on goods imported from China, which has a huge appetite for oil. If Trump's policies were to negatively impact the Chinese economy, they'd also likely dampen China's oil demand.

Trump policies thought to be inflationary

Trump has proposed broader tariffs of up to 20% on all imported goods to the U.S., announced plans to deport millions of undocumented immigrants, and enact a package of tax cuts.

If such policies were implemented, it is likely that U.S. inflation would increase, according to economists.

"Bank of America economists wrote in a note on Monday that while they still believe inflation is on a disinflationary path, the risks are now more likely to be on the upside. The risks are due to potential policy changes rather than economic fundamentals."

An import tax on goods could cause U.S. companies to increase prices, while a decrease in the labor pool may lead businesses to raise wages to attract and retain workers. Tax cuts could also increase consumer spending by putting more money in their pockets.

Bank of America economists identified pro-growth fiscal policy, tariffs, and tighter immigration as potential sources of upside inflation risk over the coming years if they are implemented.

According to Brown of Capital Economics, if Trump's policies are not implemented, the annual inflation rate would likely be around 2.1% by the end of 2025. However, if these policies are enacted, the figure would likely be around 3%, he said as a "ballpark estimate."

In a research note on Wednesday, Brown warned that the brief return of inflation to the 2% target may not last.

The implementation of policies will have a significant impact on the economy, according to economists.