Oil Drop Eases Inflation

Brent crude has fallen about 22% since the end of October, to $89.65 a barrel on November 10, as fears of a military escalation between the United States and Iran have eased. A sustained decline could help curb inflation, but its impact on consumers takes time to materialize because of refining, transport and inventory stages, while food, services and housing prices continue to put pressure on prices. October data showed that the US Consumer Price Index rose 0.4%, above the 0.3% forecast. The oil-price decline therefore does not yet signal the start of a global interest-rate-cutting cycle; its impact depends on prices continuing to fall, those declines being passed on to consumers, and not being offset by increases in other costs.

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