U.S. inflation rose to an annual rate of 7.7% in October

Consumer prices in U.S.

US consumer prices rose 7.7% year-on-year in October, up from 8.2% a month earlier.

Consumer inflation reached 7.7% in October from a year earlier and 0.4% from September, the Labor Department said Thursday. The year-on-year gain was the smallest since January. Excluding volatile food and energy prices, core inflation rose 6.3% over the past 12 months and 0.3% from September.

All figures were lower than economists had expected.

Even with a tentative easing in inflation last month, the Federal Reserve is expected to continue raising interest rates to try to stem persistently high price increases.

So far this year, the Fed has raised its benchmark interest rate six times in significant steps, raising the risk that exorbitant rates on mortgage loans, car purchases and other high-cost expenses will drive the world's biggest economy into recession.

Inflation was close to the top of many voters' minds in the mid-term congressional elections, which ended on Tuesday. Their economic worries contributed to the loss of Democrat seats in the House of Representatives, although Republicans failed to make the huge political gains that many had expected.

It is worth noting that the new rent cuts that have emerged in real time from sources such as Apartment List and Zillow are beginning to be reflected in upcoming government measures, a factor that should also lower inflation.

Although many fear that the economy will fall into recession next year, the national labour market remains resilient. Employers have added a healthy average of 407,000 jobs a month and the unemployment rate is just 3.7%. Job vacancies remain at historically high levels.

But the Fed's rate hike has severely damaged the US housing market. The average rate on a 30-year fixed mortgage has more than doubled over the past year, exceeding 7%, before falling slightly last week. As a result, housing investment collapsed in July-September, falling 26% year-on-year.

Higher mortgage rates have reduced sales. House prices are slowing sharply compared to last year and have started to fall on a monthly basis. The cost of renting a new flat is also falling.

Economists believe that house prices may have risen in October and raised the broader rate of inflation.