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Economy in Brief

U.S. CPI Well Behaved in October But Increases Are Accelerating
by Sandy Batten  November 15, 2017

The Consumer Price Index edged up 0.1% m/m (2.0% y/y) in October, exactly in line with the market's expectation from the Action Economics survey. The overall index had jumped a much larger-than-expected 0.5% m/m in September. The core index (that is, excluding food and energy prices) rose 0.2% m/m (1.8% y/y) in October, up slightly from the 0.1% m/m increase in September. Again, the October increase was exactly in line with market expectations. Prices of wireless phone services which had surprisingly depressed core inflation readings earlier this year (particularly in the spring) posted their second consecutive 0.4% m/m increase after having posted monthly declines (at time outsized) throughout much of this year.

While the year-over-year paces of advance for both the overall and the core measures remain around the Federal Reserve's 2.0% target, both measures have accelerated meaningfully over the past three months. For the overall index, in October it is up 2.0% y/y and 2.0% AR over the past six months. But over the past three months it has risen at a 4.3% AR. Similarly for the core measure. It is up 1.8% both from a year ago and also at an annual rate over the past six months. However, for the past three months it has risen at a 2.4% annual rate.

Led by a 2.4% m/m drop in gasoline prices in October (following a 13.1% m/m surge in September), energy prices fell 1.0% m/m (+6.4% y/y). In contrast, fuel oil prices jumped 2.3% m/m in October, and energy services prices rose 0.4% m/m after four consecutive monthly declines. The food index was unchanged in October (1.3% y/y) following slight increases (0.1% m/m) in August and September. Among the major grocery store food group indexes, the index for meats, poultry, fish and eggs was the only one to rise in October--up 0.6% m/m (1.5% y/y) following a 0.4% m/m decline in September. Price of new cars and trucks continued their decline, falling 0.2% m/m (-1.4% y/y) in October for their ninth consecutive monthly decline.

Services prices rose 0.3% m/m (2.6% y/y), up from a 0.2% m/m gain in September. Shelter costs rose 0.3% m/m (3.2% y/y) with lodging away from home up 1.6% m/m. Owners' equivalent rent was up 0.3% m/m (3.2% y/y) versus a 0.2% m/m rise in September. Prices of medical services rose 0.3% m/m (1.9% y/y) following a 0.1% m/m increase in September (the lowest reading in four months). Recreation costs fell 0.1% m/m (3.7% y/y) after three consecutive monthly increases.

The consumer price data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.

Consumer Price Index, All Urban Consumers (% chg) Oct Sep Aug Oct Y/Y 2016 2015 2014
Total 0.1 0.5 0.4 2.0 1.3 0.1 1.6
Total less Food & Energy 0.2 0.1 0.2 1.8 2.2 1.8 1.7
  Goods less Food & Energy 0.1 -0.2 -0.1 -1.0 -0.5 -0.5 -0.3
  Services less Energy 0.3 0.2 0.4 2.7 3.1 2.6 2.5
 Food 0.0 0.1 0.1 1.3 0.3 1.9 2.4
 Energy -1.0 6.1 2.8 6.4 -6.6 -16.7 -0.3
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