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Inflation showed signs of cooling off in October but continues to remain stubbornly high. The latest data from the Bureau of Labor Statistics showed that the Consumer Price Index was up 7.7% year-over-year in October. That is slightly lower than the 8% increase many economists were anticipating and the lowest increase since January.
Month-over-month, the Consumer Price Index was up 0.4%.
The core CPI, which excludes food and energy prices, increased by 0.3% for the month and 6.3% over the last year.
The stock market surged on the lower-than-expected increase, with the Dow Jones Industrial Average futures rising by 844 points. Nasdaq 100 futures were up 3.7%, while the S&P 500 futures rose by 3%.
Investors hope inflation will continue to slow and the Federal Reserve will be less aggressive when hiking interest rates at its next meeting.
"It certainly shows how much the markets been keyed about, worried about, and wants to run on CPI if you get any sort of help here," John Briggs of NatWest told CNBC. "It just brings up the idea of peak inflation, peak Fed...The Fed will slow and peak rather than continue to aggressively hike at 75 basis points at a time."