Good day. Today we get to see if the U.S. consumer-price index continued to come down in October from the 9.1% inflation rate it recorded in June, which was the highest level in decades. Core CPI, which excludes volatile energy and food prices, has been another story. It rose 6.6% in the year through September–the biggest increase since 1982. That also marked an acceleration from 6.3% in August and 5.9% in both June and July. With inflation so high, the Federal Reserve has been aggressively lifting interest rates in a campaign many analysts say could push the U.S. economy into a recession. Richmond Fed President Thomas Barkin on Wednesday said that concern isn’t a reason to hold back the central bank’s rate-raising push, noting the Fed can’t let inflation “fester.”

Now on to today’s news and analysis.

The U.S. inflation report for October will show how consumer prices changed last month, signaling whether their rate of increase is easing as interest rates climb.

Strong and broad price pressures fueled rapid inflation in September, the Labor Department said last month. The consumer-price index rose 8.2% from a year earlier, down from annual increases of 8.3% in August and 8.5% in July. June’s 9.1% inflation rate was the highest in four decades.

Economists surveyed by The Wall Street Journal estimated that the CPI rose 7.9% in October from a year earlier, while the core-CPI increased 6.5%.

The Federal Reserve shouldn’t stop raising interest rates for fear of a recession, Richmond Fed President Thomas Barkin said on Wednesday. “If there is one thing we learned in the 1970s, it is that the Fed can’t let inflation fester and expectations rise. If we back off for fear of a downturn, inflation comes back even stronger and requires even more restraint,” Mr. Barkin said in a speech. (MarketWatch)

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8 a.m.: Roundtable discussion with ECB’s Schnabel at Bank of Slovenia
8:30 a.m.: U.S. weekly jobless claims; U.S. consumer-price index for October
8:35 a.m.: Dallas Fed’s Logan speaks at ‘Energy and the Economy: The New Energy Landscape’ conference
9 a.m.: Philadelphia Fed’s Harker speaks on economic outlook to Risk Management Association
11 a.m.: San Francisco Fed’s Daly in virtual fireside chat with the European Economics & Financial Centre
12:05 p.m.: Bank of Canada’s Macklem speaks on the evolution of Canadian labor markets
6:30 p.m.: New York Fed’s Williams speaks at ‘Pace Celebrates Downtown Changemakers’

2 a.m.: U.K. industrial production for September; U.K. gross domestic product estimate for first quarter
7 a.m.: Lunch talk by ECB’s Panetta at Italian Institute for International Political Studies; ECB’s de Guindos speaks at XXVII Encuentro de Economía en S’Agaró
10 a.m.: University of Michigan preliminary November consumer survey
11 a.m.: ECB’s Lane participates in panel at 23rd Jacques Polak Annual Research Conference in Washington, D.C.

• Inventories at U.S. wholesalers rose in September at a slower pace compared with the previous month as demand weakened, the Commerce Department said. Inventories of merchant wholesalers increased 0.6% on month, easing from an upwardly revised 1.4% increase in August. Economists polled by the Journal expected inventories to increase by 0.8% in September. (Dow Jones Newswires)
• Mexico’s inflation eased in October amid a respite in fresh food and energy costs, while core inflation touched a 22-year high. The consumer price index rose 0.57% last month, bringing the 12-month inflation rate down to 8.41% from 8.7% in September, the National Statistics Institute said. Core CPI, which excludes energy and agricultural products but includes processed food, rose by 0.63% on month and by 8.42% from a year earlier, its highest level since August 2000. (DJN)
• China’s richest saw the biggest drop in their collective wealth in decades over the past year, as the country’s stock markets plunged and the economy slowed, in large part due to Beijing’s zero-tolerance policy toward Covid-19.
• Malaysia's economy likely recorded a double-digit growth of 12.9% on year in 3Q, according to the median estimate of 12 economists polled by The Wall Street Journal. (DJN)
• Bangladesh reached a preliminary agreement for a $4.5 billion assistance package with the International Monetary Fund as it seeks to cushion its economy from the impact of the war in Ukraine and risks posed by climate change.
• Germany’s economic outlook is less pessimistic as gas prices are falling and the government has announced sweeping fiscal support, Citi economist Christian Schulz wrote in a report, noting that “Germany is less exposed than other euro area members to the new headwinds from financial volatility.” However, Citi forecasts the German economy will contract 0.8% in 2023, following a 1.7% expansion this year. (DJN)
  U.K. real gross domestic product is expected to contract by 1.6% next year and by 0.5% in 2024 as households are set to face a severe cost-of-living squeeze in the next two years with higher interest rates and limited fiscal support, Citi economist Benjamin Nabarro wrote in a report. (DJN)

This newsletter is compiled by James Christie in San Francisco.

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