Inflation cooled off in October

• Inflation cooled off in October based on new year-over-year data out Tuesday.
• The Consumer Price Index increased 3.2% year over year in October, less than the year-over-year increase of 3.7% in September.

Inflation cooled but is still above the Fed's 2% target per the year-over-year change in the Consumer Price Index, or CPI, for October.

The Consumer Price Index increased 3.2% year over year in October, according to Bureau of Labor Statistics data released Tuesday.

The year-over-year increase in October was just less than the forecast of 3.3%, and the increase is less than the September's 3.7% year-over-year increase. September's change was the same as the 3.7% rise in August based on data that's not seasonally adjusted.

Meanwhile, the CPI neither increased nor fell in October from the preceding month per seasonally adjusted data, with a change of 0.0%. An increase of 0.1% was the forecast. This change follows a 0.4% increase in September.

Core CPI, which is the index excluding food and energy, rose 4.0% over the year ending October. That increase is just below the 4.1% increase seen over the year ending September. An increase of 4.1% was also the forecast.

Core CPI rose 0.2% from September to October, below the 0.3% increase from August to September. It was expected to rise by 0.3% month over month again.

"The index for shelter continued to rise in October, offsetting a decline in the gasoline index and resulting in the seasonally adjusted index being unchanged over the month," a news release from the Bureau of Labor Statistics on Tuesday stated.

The shelter index increased 6.7% for the 12 months ending October based on not seasonally adjusted data, which means it is still slowing down. The index rose 0.3% month over month based on seasonally adjusted data, which is a smaller increase than the 0.6% before it.

The food index didn't see as large an increase as the shelter index, with a year-over-year increase of 3.3%.

The energy index saw a decline of 4.5% year over year in October. The index also fell 2.5% in October from the previous month.

Fuel oil declined by 21.4% year over year, while gasoline of all types decreased by 5.3%.

Additionally, after various month-over-month increases, the index for gasoline actually fell. It declined 5.0% in October from the preceding month.

David Kelly, chief global strategist of J.P. Morgan Asset Management, wrote in a note ahead of the CPI release that looking broadly and not just at CPI figures, "the path to lower inflation remains intact."

"October's global composite PMI came in at 50.0 — its lowest reading since January — while supply chain pressures continue to ease," Kelly said. "New data on global food commodity prices, energy prices, hotel rates and used car prices all suggest weakening inflation as does a continued moderation in wage growth in the October jobs' report."

Jerome Powell, chair of the Federal Reserve, said on November 9 at a policy panel that the Federal Open Market Committee "is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time; we are not confident that we have achieved such a stance."

"If it becomes appropriate to tighten policy further, we will not hesitate to do so," Powell said. "We will continue to move carefully, however, allowing us to address both the risk of being misled by a few good months of data, and the risk of overtightening."

This is a developing story. Please check back for updates.