The 0.2% rise in the consumer price index (CPI-U) last month was stronger than Consensus expectations for no change in prices following the huge 1.2% spurt in September.

Though energy prices declined, the fall was limited to 0.2% due to a 14.0% (45.3% y/y) surge in natural gas prices and a 0.9% (35.9% y/y) gain in fuel oil prices. These gains were offset by gasoline prices which moved lower by 4.5% (+37.0% y/y) and in November have declined roughly another 15% m/m to $2.30 per gallon in the latest week.

Prices less food & energy rose 0.2%, twice the September increase, but the increase matched Consensus expectations. Core goods prices were unchanged as 0.5% increases in prices for medical commodities (2.6% y/y) and new vehicles (0.9% y/y) were offset by m/m declines in prices for appliances (+2.5% y/y), carpets (-3.5% y/y) and other household equipment (-6.5% y/y). Apparel prices also fell for the sixth month this year (-0.4% m/m, -1.1% y/y) and tobacco prices dropped 0.1% (5.6% y/y).

Core services prices rose 0.3% as shelter prices jumped 0.5% (2.3% y/y) and medical care services prices also rose 0.5% (4.6% y/y). Public transportation prices ballooned 1.4% (7.8% y/y) while school tuition costs rose 0.2% (6.2% y/y).

The chained CPI which adjusts for shifts in the mix of consumer purchases rose 0.3% and less food & energy chain prices rose 0.4%.

Understanding the Inflation Targeting Debate from the Federal Reserve Bank of St. Louis is available here.