US Inflation in November Declines, Annual Inflation Rate at 1.3%

It’s been a similar inflation story since July — Americans are paying less driving to the grocery store but they’re having to spend more once they get there. Gasoline prices dropped for a fifth straight month in November yet the cost to buy food has climbed during the same period, new inflation figures from the US government show.

Fortunately for most consumers, they’re catching the bigger break by paying less at the pump. Led by plunging energy prices, the cost of living fell last month by the most in nearly six years.

Consumer price declined 0.3% in November, the biggest drop since December 2008, after being flat in October, according to the US Labor Department and its monthly report on the Consumer Price Index (CPI). The CPI measures the change in prices that consumers pay for certain goods and services throughout the United States. Economists had forecasted a smaller decline of 0.1%, according to most surveys.

"There really aren’t any inflationary pressures, even outside of energy," said Stuart Hoffman, chief economist at PNC Financial Services Group Inc., who is among the most accurate CPI forecasters over the past two years, according to data compiled by Bloomberg.

Food prices picked some last month at 0.2% after rising 0.1% in October. They have jumped 3.2% over the past 12 months. Energy prices, on the other hand, tumbled 3.8% in November after falling 1.9% in the prior month. They are down 4.8% from a year ago. More important for consumers’ wallets, gasoline prices dived 6.6% and are down 10.5% from the same time last year.

Yanking out food and energy, which economists like to do for analysis since the two components are often volatile, so-called core consumer prices edged up 0.1% in November after rising 0.2% in October. As recently as May, the core inflation rate advanced 0.3% for the largest gain since August 2011.

Core consumer advancing items included:

  • Shelter – up 0.3% compared to 0.2% previously
  • Rent – also up 0.3% compared to 0.2% previously
  • Medical care services – up 0.4% compared to 0.2% previously
  • Medical care commodities – up 0.6% after being flat previously
  • Airfares – up 1.4% compared to 2.4% previously
  • Meats, poultry, fish, and eggs – up 0.6% after declining 0.4% previously

Core consumer declining items included:

  • Clothing – down 1.1% compared to 0.2% previously
  • Dairy and related products – down 0.2% after climbing 0.5% previously
  • Used cars and trucks – down 1.2% compared to 0.9% previously
  • New cars – down 0.1% after advancing 0.2% previously. The decline was the first since June.
  • Household furnishings and operations – down 0.2% after rising 0.4% previously for the largest increase since November 2012.

US inflation increased 1.3% in the 12 months through November after rising 1.7% in October, September and August. Annual inflation climbed 2% in July. At 2.1% in the 12 months ended in May and in June, annual inflation rates peaked to the highest since October 2012. Other US inflation rates published by the Labor Department this year include gains of 2% April, 1.5% in March, 1.1% in February and 1.6% in January.

Core US inflation advanced 1.7% over the past 12 months after increasing 1.8% in October. Other 12-month core inflation rates reported in 2014 include matching gains of 1.7% in September and August, the same 1.9% gains in July and June, the May climb of 2%, the April increase of 1.8%, the March advance of 1.7% and matching gains of 1.6% in February and in January.

The core 12-month reading is the benchmark inflation figure monitored by the Federal Open Market Committee (FOMC) as it helps in deciding where to set the key interest rate.

"Beside a brief mention about keeping an eye on oil prices, do not expect this inflation report to materially impact today’s Fed decision," Reuters quoted Jay Morelock, an economist at FTN Financial in New York.

The current 1.7% reading is well below the Fed’s 2% annual inflation target. The FOMC’s monthly policy meeting started on Tuesday and will end later on Wednesday with a report released at 2 p.m. ET.

Update: The Fed’s policy statement showed little concern for inflation, noting:

"Inflation has continued to run below the Committee’s longer-run objective, partly reflecting declines in energy prices. Market-based measures of inflation compensation have declined somewhat further; survey-based measures of longer-term inflation expectations have remained stable."

It also added: "The Committee expects inflation to rise gradually toward 2 percent as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate. The Committee continues to monitor inflation developments closely."

Inflation data in the following columns offer recent monthly and annual percentage changes in prices of consumer goods and services that were surveyed and analyzed by the Labor Department’s Bureau of Labor Statistics.

May 2014 – November 2014 Consumer Prices – Gains & Losses in Percent

  May 2014 June 2014 July 2014 Aug 2014 Sept 2014 Oct 2014 Nov 2014 12 Month
All items 0.4 0.3 0.1 -0.2 0.1 .0 -0.3 1.3
  Food 0.5 0.1 0.4 0.2 0.3 0.1 0.2 3.2
    Food at home 0.7 .0 0.4 0.2 0.3 0.1 0.1 3.4
    Food away from home 0.2 0.2 0.3 0.2 0.3 0.2 0.4 2.9
  Energy 0.9 1.6 -0.3 -2.6 -0.7 -1.9 -3.8 -4.8
    Energy commodities 0.6 3.0 -0.3 -3.9 -1.1 -3.0 -6.4 -10.2
      Gasoline (all types) 0.7 3.3 -0.3 -4.1 -1.0 -3.0 -6.6 -10.5
      Fuel oil -1.4 -1.7 -0.7 -1.2 -2.1 -4.0 -3.5 -10.1
    Energy services 1.4 -0.4 -0.4 -0.6 -0.2 -0.2 -0.3 2.9
      Electricity 2.3 0.2 -0.3 0.1 -0.7 0.5 0.1 2.8
      Utility (piped) gas service -1.7 -2.6 -0.4 -2.8 1.6 -2.7 -1.7 3.2
  All items less food, energy 0.3 0.1 0.1 .0 0.1 0.2 0.1 1.7
    Commodities less food, energy 0.1 0.1 .0 -0.1 .0 .0 -0.4 -0.5
      New vehicles 0.2 -0.3 0.3 0.2 .0 0.2 -0.1 0.6
      Used cars and trucks -0.1 -0.4 -0.3 -0.3 -0.1 -0.9 -1.2 -3.1
      Apparel 0.3 0.5 0.2 -0.2 .0 -0.2 -1.1 -0.3
      Medical care 0.5 0.7 0.3 -0.1 0.5 .0 0.6 3.1
    Services less energy 0.3 0.1 0.1 .0 0.2 0.3 0.2 2.5
      Shelter 0.3 0.2 0.3 0.2 0.3 0.2 0.3 3.0
      Transportation 1.0 0.1 -0.7 -0.6 0.1 0.8 0.3 1.8
      Medical care 0.3 .0 0.1 .0 0.1 0.2 0.4 2.3

 

US inflation data from the Bureau of Labor Statistic (BLS) is released monthly about two weeks into a new month. The information details consumer prices through to the previous month. Data for December inflation and the annual period, as provided by the Consumer Price Index (CPI) and BLS summary report, is scheduled for release on January 16, 2015.

CPI data is used to calculate US inflation rates and it is also the backbone for this site’s inflation-adjusting calculator. The US Inflation Calculator provides accumulated inflation and the change in buying power of the US dollar between two dates.

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