US Inflation Lessens as Consumer Prices Remain Flat in November 2011

December 16, 2011 · Filed Under Inflation 

After surging earlier in 2011, US inflation has trended lower in recent months, inflation data released Friday by the US government highlights. Consumer prices were flat in November as food prices cooled and American’s paid less for gasoline which offset higher costs in other items like shelter, medical care, and clothing.

Consumer prices were unchanged in November on a seasonally adjusted basis after falling 0.1 percent in October. Increases of 0.3, 0.4 and 0.5 percent had been reported by the bureau for the respective months of September, August and July. Falling energy prices have been the major catalyst in recent inflation dips.

"The energy index declined for the second month in a row and offset increases in the indexes for food and all items less food and energy," noted the US Labor Department in its monthly Consumer Price Index (CPI) report which is seen as the government’s key measure of US inflation. "As in October, the gasoline index fell sharply and the index for household energy declined as well."

Food prices in November were 0.1 percent higher, matching October’s level. Energy prices declined 1.6 percent after falling 2.0 percent previously. Leading declines was a 2.4 percent drop in gasoline prices. Gasoline had fallen 3.1 percent in October following three straight monthly increases.

"The pace of inflation has clearly moderated in recent months, and is expected to continue to ease in the months ahead," wrote Jim Baird, chief investment strategist for Plante Moran Financial Advisors, in a research note cited on CNNMoney.com.

"This is more good news for the consumer. Should inflation continue to moderate, households should feel better about their ability to spend a bit more freely," he added.

Stripping out volatile food and energy prices, the so-called core US inflation rate advanced 0.2 percent in November after monthly advances of 0.1 percent in October and September. The level was the biggest increase since August. None of the major core consumer goods and services tracked by the US Labor Department registered directional changes, but increases were moderated.

  • Used car prices fell 0.1 percent against the previous 0.1
  • Clothing costs rose 0.6 percent versus 0.4
  • Medical car went up 0.2 percent against 0.3

New car prices declined 0.3 percent for a second straight month and the cost of shelter was 0.2 percent higher, also matching the previous month.

US inflation climbed 3.4 percent in the 12 months ending November after advancing 3.5 and 3.9 percent in each of the year-over-year increases ending October and September. The annual inflation rate was at 1.1 percent one year ago and registered a record low of 0.6 percent in October 2010.

"If you look at the headline number, you’ll see it’s been undermined over the last two months by a significant drop in energy prices. But this decline is not sustainable. Oil prices are back around $100 a barrel now, so it suggests we’re likely to see a rebound," Reuters noted Michael Woolfolk, Senior Currency Strategist at BYN Mellon.

"More troubling is the persistent rise in core inflation, which surprised to the upside. We’ve been ignoring headline inflation because of the volatility of food and energy prices, but if they remain high, they will drag core higher."

The core US inflation rate rose 2.2 percent from November 2011, after increases of 2.1 percent in October and 2.0 percent in September and August. The level is the highest since October 2008. This longer term core inflation index is the one most closely watched by the Federal Reserve. The core index edged a bit higher yet again over the Fed’s target range which is not officially stated but often cited from 1.5 to 2.0 percent.

US Labor Department inflation data from May through to November and on a 12-month basis follows:

November 2011 Consumer Prices – Gains (percent)

  May
2011
June
2011
July
2011
Aug
2011
Sept
2011
Oct
2011
Nov
2011
12
Month
All items 0.2 -0.2 0.5 0.4 0.3 -0.1 .0 3.4
  Food 0.4 0.2 0.4 0.5 0.4 0.1 0.1 4.6
    Food at home 0.5 0.2 0.6 0.6 0.6 0.1 -0.1 5.9
    Food away from home 0.2 0.3 0.2 0.4 0.2 0.2 0.3 2.9
  Energy -1.0 -4.4 2.8 1.2 2.0 -2.0 -1.6 12.4
    Energy commodities -1.9 -6.3 4.3 1.6 2.7 -2.9 -2.1 19.9
      Gasoline (all types) -2.0 -6.8 4.7 1.9 2.9 -3.1 -2.4 19.7
      Fuel oil -0.8 -2.2 -1.7 -0.4 -0.7 -0.5 2.7 25.0
    Energy services 0.6 -1.1 0.4 0.4 0.7 -0.4 -0.7 1.7
      Electricity 0.8 -1.6 0.8 -0.1 0.7 0.4 0.4 2.7
      Utility (piped) gas service -0.3 0.4 -1.2 2.2 0.8 -3.0 -4.4 -1.3
  All items less food, energy 0.3 0.3 0.2 0.2 0.1 0.1 0.2 2.2
    Comm. less food, energy 0.5 0.5 0.3 0.4 -0.2 -0.1 0.1 2.2
      New vehicles 1.1 0.6 .0 .0 .0 -0.3 -0.3 3.3
      Used cars and trucks 1.1 1.6 0.7 0.9 -0.6 -0.6 -0.1 4.9
      Apparel 1.2 1.4 1.2 1.1 -1.1 0.4 0.6 4.8
      Medical care .0 -0.1 .0 0.1 0.2 0.3 0.2 3.1
    Services less energy 0.2 0.1 0.2 0.2 0.2 0.2 0.2 2.1
      Shelter 0.2 0.2 0.3 0.2 0.1 0.2 0.2 1.8
      Transportation 0.1 -0.3 -0.1 0.2 0.5 0.1 0.1 2.6
      Medical care 0.3 0.3 0.3 0.3 0.2 0.5 0.5 3.5

 

The US Labor Department will publish the December 2011 Consumer Price Index information on January 19, 2012 at 8:30 AM Eastern Time. Current and historic CPI data is used as the core data for the US Inflation Calculator.

 

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