U.S. CPI Gain Unexpectedly Moderates in October
by:Tom Moeller
|in:Economy in Brief
Summary
- Year-to-year gains diminish.
- Core prices lead moderation.
- Food prices remain firm; energy costs rebound.
The price inflation environment cooled off a bit in October. Consumer prices rose 0.4% (7.7% y/y), repeating the September gain. These readings remain below the 1.0% and 1.3% increases logged in May and June when energy prices were rising more quickly. A 0.6% October rise had been expected in the Action Economics Forecast Survey. Prices excluding food and energy improved 0.3% last month after two straight 0.6% gains. The 6.3% y/y gain remained close to the strongest since August 1982. A 0.5% October increase had been expected.
Energy prices strengthened 1.8% last month (17.6% y/y) led by fuel oil prices which rose 10.5% (44.2% y/y). Gasoline prices increased 4.0% (17.5% y/y) following three straight monthly declines. Electricity prices edged 0.1% higher (14.1% y/y). Natural gas prices declined 4.6%, though they rose 20.0% y/y.
Food prices increased 0.6% in October (10.9% y/y), down from two straight 0.8% monthly gains. Food prices away from home increased 0.9% (NSA, 8.6% y/y). Cereal & bakery product prices rose 0.8% (15.9% y/y) while egg prices jumped 10.1% (43.0% y/y). Beverage prices gained 0.5% (12.7% y/y). To the downside, fruit & vegetable prices fell 0.9% (+9.3% y/y) while meat, poultry & fish prices eased 0.1% (+5.9% y/y). The cost of dairy products also slipped 0.1% (+15.5% y/y).
Services prices less energy increased 0.5% (6.7% y/y) last month, the weakest increase in three months. Education & communication costs improved 0.1% (1.4% y/y) but medical care services prices declined 0.6% (+5.4% y/y). Transportation services prices strengthened 0.8% (15.2% y/y) while recreation service prices also gained 0.8% (3.9% y/y). Shelter costs increased 0.8% (6.9% y/y) as the owners' equivalent rent of primary residences gained 0.6% (6.9% y/y) and rental costs increased 0.7% (7.5% y/y). The cost of lodging away from home jumped 4.9% (5.9% y/y).
Goods prices less food & energy declined 0.4% in October (+5.1% y/y) after holding steady in September. Household furnishings prices weakened 0.2% (+8.8% y/y) and appliance costs declined 0.5% (+0.9% y/y), off for the fourth straight month. Medical care product prices held steady (+3.1% y/y) while apparel prices fell 0.7% (+4.1% y/y), down for the second straight month. To the upside, recreation product prices increased 0.7% (4.3% y/y) and new vehicle prices increased 0.4% (8.4% y/y).
The Consumer Price Index data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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