US Inflation in October Unchanged, Annual Inflation Rate at 1.7%

Plunging gasoline prices took a big bite out of inflation in October but higher costs for housing, rents, hotel rooms, furniture, food, transportation and medical care kept overall US consumer prices from going negative like expected.

In good news for Americans that many have felt now for four straight months, gas prices dropped sharply as did other energy components like natural gas. On the flip side, prices at the grocery store continue to dent paychecks.

Consumer price inflation was flat in October after rising 0.1% in September, according to the United States 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 US. Predictions had pegged a 0.1% drop in overall consumer prices for October.

By the numbers, food prices strode less briskly at 0.1% after running at 0.3% in the prior month, but they have soared 3.1% from a year ago and have advanced for ten consecutive months. Energy prices dived 1.9% in October following the prior 0.7% monthly decline. Within the energy grouping, gasoline prices tumbled 3% after falling 1% previously and they are down 5% from the same time last year.

Stripping out food and energy, which economists like to do for analysis because the two components are often volatile, so-called core consumer prices advanced in October by 0.2%, the most in five months, after picking up in September by 0.1%, which was the level economists had expected again for October. As recently as May, the monthly core inflation rate surged 0.3% for the biggest increase since August 2011.

Core advancing items included:

  • Shelter, up 0.2% compared to 0.3% previously
  • Rent, up 0.2% compared to 0.3% previously
  • Household furnishings and operations, up 0.4% for the largest increase since November 2012. They were flat previously.
  • Dairy and related products, up 0.5%, matching the prior month
  • Medical care services, up 0.2% compared to 0.1% previously
  • New cars, up 0.2% after being flat previously
  • Airfares, up 2.4% after dropping 0.5% previously
  • Tobacco, up 0.6% after falling 0.1% previously

Core declining items included:

  • Meats, poultry, fish, and eggs, down 0.4% after rising 0.7% previously
  • Used cars and trucks, down 0.9% compared to 0.1% previously
  • Clothing, down 0.2% after being flat previously

US inflation increased 1.7% over the past 12 months ended in October, the same as in September and in 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 reported 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 1.8% over the past 12 months, breaking away from the same prior two readings of 1.7%. Other 12-month core inflation rates reported in 2014 include matching gains of 1/9% in June and July, the May climb of 2%, the April increase of 1.8%, the March advance of 1.7% and the same 1.6% gains in February and in January.

"The decline in energy prices simply hasn’t yet bled through to the core. Inflation, while below the Fed’s target, is certainly not "too low," today’s flat headline reading furthers the debate surrounding potential Fed activity," Reuters quoted Dan Greenhaus, chief strategist at BTIG in New York.

The core 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. The Fed has a 2% annual inflation target.

"Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year," the FOMC said in a statement following their last monetary policy meeting at the end of October.

Inflation data below lists 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 Statistic.

April 2014 – October 2014 Consumer Prices – Gains & Losses in Percent

  Apr 2014 May 2014 June 2014 July 2014 Aug 2014 Sept 2014 Oct 2014 12 Month
All items 0.3 0.4 0.3 0.1 -0.2 0.1 .0 1.7
  Food 0.4 0.5 0.1 0.4 0.2 0.3 0.1 3.1
    Food at home 0.4 0.7 .0 0.4 0.2 0.3 0.1 3.3
    Food away from home 0.3 0.2 0.2 0.3 0.2 0.3 0.2 2.8
  Energy 0.3 0.9 1.6 -0.3 -2.6 -0.7 -1.9 -1.6
    Energy commodities 1.9 0.6 3.0 -0.3 -3.9 -1.1 -3.0 -4.9
      Gasoline (all types) 2.3 0.7 3.3 -0.3 -4.1 -1.0 -3.0 -5.0
      Fuel oil -3.0 -1.4 -1.7 -0.7 -1.2 -2.1 -4.0 -6.5
    Energy services -1.9 1.4 -0.4 -0.4 -0.6 -0.2 -0.2 3.2
      Electricity -2.6 2.3 0.2 -0.3 0.1 -0.7 0.5 3.1
      Utility (piped) gas service 0.3 -1.7 -2.6 -0.4 -2.8 1.6 -2.7 3.4
  All items less food, energy 0.2 0.3 0.1 0.1 .0 0.1 0.2 1.8
    Commodities less food, energy 0.1 0.1 0.1 .0 -0.1 .0 .0 -0.2
      New vehicles 0.3 0.2 -0.3 0.3 0.2 .0 0.2 0.6
      Used cars and trucks 0.5 -0.1 -0.4 -0.3 -0.3 -0.1 -0.9 -1.7
      Apparel .0 0.3 0.5 0.2 -0.2 .0 -0.2 0.7
      Medical care 0.3 0.5 0.7 0.3 -0.1 0.5 .0 2.6
    Services less energy 0.3 0.3 0.1 0.1 .0 0.2 0.3 2.5
      Shelter 0.2 0.3 0.2 0.3 0.2 0.3 0.2 3.0
      Transportation 0.7 1.0 0.1 -0.7 -0.6 0.1 0.8 1.8
      Medical care 0.3 0.3 .0 0.1 .0 0.1 0.2 1.9

 

US inflation data from the Bureau of Labor Statistic (BLS) is released every month about two weeks into a new month. The information details consumer prices through to the previous month. Data for November inflation, as provided by the Consumer Price Index (CPI) and BLS summary report, is scheduled for release on December 17, 2014.

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

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