Consumer Prices Edge Up in November 2010, Annual US Inflation Rate at 1.1%

The cost of living rose less than expected in November 2010 as energy prices climbed by their smallest amount since June, the government revealed Wednesday in its monthly report about the state of US inflation.

The Consumer Price Index (CPI), the most closely watched barometer for US inflation, rose 0.1 percent in November 2010 following an increase of 0.2 percent in October — a level most economists had again expected for November. Consumer prices have risen for five straight months.

While energy prices continue to lead the gains, they were tamed as compared to the previous four months. Gasoline prices are an example. They soared 4.6 percent in October, but prices were up just 0.7 percent in November. They are still 7.3 percent higher as compared to a year ago, however.

Food costs ticked slightly higher, climbing 0.2 percent last month versus a previous increase of 0.1 percent.

Stripping out the more volatile food and energy items, the so-called core US inflation rate also rose 0.1 percent. That marked the first increase since July.

"The index for all items less food and energy rose in November after being unchanged the previous three months," the US Bureau of Labor Statistics reported. "Increases in the indexes for shelter and airline fares accounted for most of the rise, while the indexes for new vehicles, used cars and trucks, and household furnishings and operations all declined."

US Inflation rose 1.1 percent in the past year. That was lower than the 1.2 percent 12-month reading reported in October.

"Inflation is a non-threat right now, there’s a lot of slack in the economy," Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who correctly forecast the rise in the CPI, said and was quoted on Bloomberg. "Inflation will remain very subdued and tepid over the next several months."

The core US inflation rate increased on an annual basis to 0.8 percent after a record 0.6 percent rise in October which was the lowest 12-month increase since record-keeping began in 1957. The level continues to remain under the Federal Reserve’s preferred range of 1-2 percent, as noted in the Fed’s monthly FOMC statement released Tuesday.

"Employers remain reluctant to add to payrolls. The housing sector continues to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have continued to trend downward," said the Federal Open Market Committee (FOMC).

"The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period," the FOMC added.

"The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate."

Consumer prices as reported by the US Labor Department follow:

November 2010 Consumer Prices – Gains (%)

May Jun Jul Aug Sept Oct Nov 12
Month
All items -0.2 -0.1 0.3 0.3 0.1 0.2 0.1 1.1
  Food .0 .0 -0.1 0.2 0.3 0.1 0.2 1.5
    Food at home .0 -0.1 -0.1 .0 0.3 .0 0.3 1.7
    Food away from home 0.1 0.1 .0 0.3 0.3 0.1 0.1 1.3
  Energy -2.9 -2.9 2.6 2.3 0.7 2.6 0.2 3.9
    Energy commodities -4.8 -4.1 4 3.8 1.8 4.4 0.8 7.7
      Gasoline (all types) -5.2 -4.5 4.6 3.9 1.6 4.6 0.7 7.3
      Fuel oil -1.4 -3.2 -1.6 0.9 0.8 4.7 4.2 11.1
    Energy services -0.5 -1.6 0.8 0.4 -0.8 0.2 -0.7 -1.0
      Electricity -0.4 -2.2 0.5 0.2 -0.3 0.4 0.9 0.3
      Utility (piped) gas service -1 0.6 1.7 1.1 -2.3 -0.4 -5.7 -4.8
  All items less food, energy 0.1 0.2 0.1 .0 .0 .0 0.1 0.8
    Comm. less food, energy 0.1 0.2 0.2 0.1 -0.2 -0.2 -0.1 -0.2
      New vehicles 0.1 0.1 0.1 0.3 0.1 -0.2 -0.4 -0.4
      Used cars and trucks 0.6 0.9 0.8 0.7 -0.7 -0.9 -0.5 6.0
      Apparel 0.2 0.8 0.6 -0.1 -0.6 -0.3 0.2 -0.8
      Medical care 0.1 .0 -0.2 0.2 0.3 0.1 0.2 2.7
    Services less energy 0.1 0.1 0.1 .0 0.1 0.1 0.2 1.1
      Shelter 0.1 0.1 0.1 .0 .0 0.1 0.1 0.2
      Transportation 0.4 .0 .0 0.1 0.3 0.3 0.5 2.9
      Medical care .0 0.4 .0 0.2 0.8 0.2 0.1 3.4

 

The Labor Department’s Consumer Price Index for December 2010 is scheduled for release on January 14, 2011, at 8:30 a.m. (EDT). The CPI data is used as the core engine for the Inflation Calculator.

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