US inflation fell sharply in October, and by more than expected, boosting hopes that US interest rates have peaked.
The news sent stock futures soaring on Wall Street with the Dow Jones, S&P and Nasdaq all expected to open higher, while the dollar plummeted.
The consumer price index was unchanged in October on a seasonally adjusted basis, after increasing 0.4% in September, the US Bureau of Labor Statistics reported, taking annual growth to 3.2%, down 3.7% in September.
Both figures were below forecasts of 0.1% and 3.3% respectively.
Core CPI, which strips out food and energy, rose 0.2% in October from September, less than the 0.3% forecast, taking annual growth to 4.0%, down from 4.1% in September. It was expected to remain unchanged.
Richard Garland, Chief Investment Strategist, Omnis Investments said: “This should reaffirm the Fed's view that interest rates are restrictive enough to bring inflation back to target, albeit they will keep rate hikes on the table until a low 2% inflation handle heaves into view.”
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.
The energy index fell 2.5% over the month as a 5.0% decline in the gasoline index more than offset increases in other energy component indexes.
Food prices increased 0.3% in October, after rising 0.2% in September.