US Inflation Rate Hits 2-Year High; Consumer Prices Climb in October

Annual inflation in the United States ran at the fastest rate in two years as consumer prices in October climbed the most in six months, according to government data released Thursday, November 17.

The monthly cost of living increase marks a third in a row and was led, like in September, by higher shelter and gasoline prices.

In the headline figure, consumer prices increased 0.4% in October after rising 0.3% in September, the Labor Department said in its monthly report on the Consumer Price Index. The CPI measures what Americans pay for everything from cars to coffee. The October gain is the largest since the same 0.4% increase in April, which was the biggest since February 2013.

Gasoline prices jumped 7% last month after surging 5.8% in September. They again accounted for more than half of the overall consumer price increase, the Labor Department’s report said. Even after the sharp declines in January, February and July and the more modest decrease in August, prices at the pump are now just 0.9% lower than a year earlier.

The broader index for energy, which combines items like gasoline, electricity and fuel oil, rose 3.5% after advancing 2.9% previously. Energy prices have declined 2.9% over the past 12 months.

Food prices were flat for a fourth straight month. A drop in food at home prices offset a gain in the price for food away from home. The cost of food fell 0.4% in the year to October.

Stripping food and energy, so-called core consumer prices advanced 0.1% for a second month in a row.

Within this core grouping, shelter prices rose 0.4% for a second straight month. The two gains are the largest since May. Components of shelter include pricing items like rent, rental equivalence, lodging away from home, and housing at school. Shelter prices are 3.5% higher than 12 months ago.

"Along with the shelter index, the indexes for apparel, new vehicles, and motor vehicle insurance all increased in October, as did the indexes for education, household furnishings and operations, alcoholic beverages, and tobacco," the Labor Department’s report said.

Meanwhile, the indexes for personal care, communication, used cars and trucks, recreation, and airfare all declined.

U.S. inflation advanced by a rate of 1.6% year-over year, the highest inflation rate since October 2014, following the 1.5% increase for the 12 months ended September.

In rounding out the Labor Department’s report, core U.S. inflation rose 2.1% on an annual basis after running at a 2.2% pace in the 12 months ended September. The core annual reading is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) as it helps the central bank decide where to set the key interest rate.

"We’re seeing a gradual uptrend in inflation," Bloomberg News quoted Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado. "It’s one more factor that locks in a Fed hike in December."

Inflation data below is for the last seven months through October, as published by the US Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi). To get the data, the BLS monitors prices of consumer goods and services from around the nation. They are continually collected, analyzed and then summarized in monthly reports. The data below offers the monthly and latest annual changes in percentages.

April to October 2016 Consumer Prices – Gains & Losses in Percent

  Apr 2016 May 2016 June 2016 July 2016 Aug 2016 Sept 2016 Oct 2016 12 Month
All items 0.4 0.2 0.2 .0 0.2 0.3 0.4 1.6
  Food 0.2 -0.2 -0.1 .0 .0 .0 .0 -0.4
    Food at home 0.1 -0.5 -0.3 -0.2 -0.2 -0.1 -0.2 -2.3
    Food away from home 0.2 0.2 0.2 0.2 0.2 0.2 0.1 2.4
  Energy 3.4 1.2 1.3 -1.6 .0 2.9 3.5 0.1
    Energy commodities 7.8 2.4 3.3 -4.4 -0.9 5.5 6.7 -0.9
      Gasoline (all types) 8.1 2.3 3.3 -4.7 -0.9 5.8 7.0 -0.9
      Fuel oil 1.9 6.2 3.3 -1.3 -2.5 2.4 5.9 -2.1
    Energy services -0.1 0.2 -0.5 1.0 0.8 0.7 0.5 1.3
      Electricity -0.3 -0.2 -0.5 0.5 0.5 0.7 0.4 0.4
      Utility (piped) gas service 0.6 1.7 -0.4 3.1 2.1 0.8 0.9 4.8
  All items less food, energy 0.2 0.2 0.2 0.1 0.3 0.1 0.1 2.1
    Commodities less food, energy -0.1 -0.2 -0.3 -0.1 0.1 -0.1 0.1 -0.5
      New vehicles -0.3 -0.1 -0.2 0.2 .0 -0.1 0.2 0.3
      Used cars and trucks -0.3 -1.3 -1.1 -1.0 -0.6 -0.3 -0.1 -4.1
      Apparel -0.3 0.8 -0.4 .0 0.2 -0.7 0.3 0.7
      Medical care 0.5 -0.4 0.8 0.5 1.4 0.6 0.1 5.0
    Services less energy 0.3 0.3 0.3 0.2 0.3 0.2 0.2 3.0
      Shelter 0.3 0.4 0.3 0.2 0.3 0.4 0.4 3.5
      Transportation 0.7 0.3 0.3 -0.2 0.1 .0 -0.2 2.6
      Medical care 0.3 0.5 0.2 0.5 1.0 .0 .0 4.1

 

The BLS publishes inflation data around the middle of a month with consumer prices surveyed through to the previous month. The Consumer Price Index (CPI) for November and over the latest 12-month or annual period becomes public on December 15, 2016.

CPI data is used in calculating inflation rates and in this site’s inflation calculator. The US Inflation Calculator on the homepage shows accumulated inflation and the change in buying power of the U.S. dollar over time.

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