US Inflation in October 2013 Retreats, 12-Month Inflation Rate Eases

The American cost of living decreased in October for the first time in six months and the annual inflation rate was the lowest in four years, the US government reported Wednesday in Washington.

Annual inflation eased and consumer prices retreated last month as sharply lower gasoline prices offset higher prices in food, transportation, used vehicles and the cost to rent and own homes, Consumer Price Index (CPI) data from the Bureau of Labor Statistics (BLS) shows.

Consumer prices declined 0.1% in October after rising 0.2% in September, the BLS noted. The decline was the first since April when the CPI dropped 0.4%. The CPI measures the change in prices for major goods and services Americans’ buy. This inflation data is watched closely by economists, Fed policy-makers and investors. Forecasts by economists, according to Bloomberg News and MarketWatch, had expected consumer prices in October to be unchanged.

In some specifics, prices at the pump fell 2.9% in October after rising 0.8% in September. Gasoline prices have tumbled 10.1% from a year ago. Groceries went up 0.1%, however, after flattening out in the prior month. The cost of food has increased 1.3% in the past year.

Core US inflation in October advanced 0.1% for a third consecutive month. The core rate discounts the more volatile food and energy categories. Most of the core increase came from used vehicles (up 0.3%), shelter (up 0.1%), transportation (up 0.7%) and medical care commodities (up 0.3%).

US inflation rose 1.0% year-over-year through October, the smallest 12-month increase since October 2009. The annual inflation rate climbed 1.2% months during the 12 months ended September. Past inflation rates reported by the BLS for 2013 include annual increases of 1.5% by August, 2% by July, 1.8% by June, 1.4% by May, 1.1% by April, 1.5% by March, 2% by February and 1.6% by January.

Core US inflation over the last 12 months climbed 1.7%, matching the prior month’s gain. Earlier readings reported in 2013 include 1.8% in August, 1.7% in July, 1.6% in June, matching 1.7% in May and April, 1.9% in March, 2.0% in February and 1.9% in each of the three months before then.

The core annual inflation rate is the benchmark, monitored by the Federal Reserve as it helps decide where the central bank sets its key interest rate. The most recent 1.7% gain continues to be under the Fed’s target inflation rate of 2%.

"From the Federal Reserve’s perspective, inflation is too low, one reason why the central bank continues to provide massive stimulus to the economy," said Stuart Hoffman, PNC Bank chief economist, in a note to clients.

"Inflation is a distant concern at this time," Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said before the report. "It gives the Fed room for its continued quantitative-easing efforts."

Of note and to take into account for this round of inflation data, the US Labor Department said the government shutdown last month impacted its data collection. On the subject and in its entirety, the BLS CPI summary noted:

"As a result of the partial federal government shutdown, all CPI staff were furloughed from October 1, 2013 through October 16, 2013. Data collection, data review and index computation commenced shortly after the end of the shutdown. In order to minimize the impact of the shutdown on the quality and timeliness of the index, resources normally devoted to maintenance and improvement work were redirected into data collection and index production. The sample of prices used to calculate the October index was about 75 percent of the amount usually used in the CPI."

Offered in the grid below are percent changes in prices of major consumer goods and services that are surveyed and analyzed by the US government. The periods covered are from April through October and over the past 12 months.

April 2012 – October 2013 Consumer Prices – Gains & Losses in Percent

  Apr 2013 May 2013 June 2013 Jul 2013 Aug 2013 Sept 2013 Oct 2013 12 Month
All items -0.4 0.1 0.5 0.2 0.1 0.2 -0.1 1.0
  Food 0.2 -0.1 0.2 0.1 0.1 .0 0.1 1.3
    Food at home 0.1 -0.3 0.2 0.1 0.1 .0 0.1 0.8
    Food away from home 0.3 0.2 0.2 0.2 0.2 0.1 0.1 1.9
  Energy -4.3 0.4 3.4 0.2 -0.3 0.8 -1.7 -4.8
    Energy commodities -7.9 -0.1 5.7 1.0 .0 0.9 -2.7 -9.5
      Gasoline (all types) -8.1 .0 6.3 1.0 -0.1 0.8 -2.9 -10.1
      Fuel oil -4.4 -2.9 -0.5 1.1 1.2 0.9 -0.6 -4.6
    Energy services 1.4 1.2 0.1 -1.0 -0.7 0.8 -0.2 3.3
      Electricity 0.5 0.8 0.2 -0.3 -0.1 0.5 0.1 3.0
      Utility (piped) gas service 4.4 2.4 -0.4 -2.8 -2.3 1.8 -1.0 4.4
  All items less food, energy 0.1 0.2 0.2 0.2 0.1 0.1 0.1 1.7
    Comm. less food, energy .0 .0 0.2 .0 .0 -0.1 -0.1 -0.1
      New vehicles 0.3 .0 0.3 0.1 .0 0.2 -0.1 1.0
      Used cars and trucks 0.6 -0.1 -0.4 -0.4 -0.1 .0 0.3 1.4
      Apparel -0.3 0.2 0.9 0.6 0.1 -0.5 -0.5 -0.2
      Medical care 0.1 -0.5 0.5 0.4 0.4 0.1 0.3 0.5
    Services less energy 0.1 0.2 0.2 0.2 0.2 0.2 0.2 2.3
      Shelter 0.2 0.3 0.2 0.2 0.2 0.2 0.1 2.3
      Transportation -0.2 0.4 -0.1 0.4 -0.5 0.3 0.7 2.5
      Medical care -0.1 .0 0.4 0.1 0.7 0.3 -0.1 2.9

 

US inflation data is collected by the Bureau of Labor Statistics. The BLS has scheduled the release of November inflation data in the form of the Consumer Price Index (CPI) on December 17, 2013.

The Consumer Price Index is used to calculate inflation rates and is used for this site’s US Inflation Calculator. The calculator provides accumulated inflation and the change in the buying power of the US dollar from one date to another.

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