Annual U.S. Inflation Rises 1.2%; Consumer Prices Unchanged in October

Inflation in the United States was subdued in October following four straight months of gains, according to a government report published Thursday, Nov. 12.

Inflation pressures eased just a bit over the past year, also, with energy prices dropping the most since the 12 months ended July.

U.S. consumer prices were unchanged in October after rising 0.2% in September, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a broad measure of what Americans pay for everyday items ranging from coffee to cars.

"Component indexes were mixed, with many offsetting increases and decreases," the Labor Department’s monthly report stated.

Prices at the pump declined 0.5% — their first drop since May — after edging 0.1% higher in September. Gasoline prices are 18% lower than a year ago. The broader index for energy, which combines items like gasoline, electricity and fuel oil, edged up 0.1% in October after rising 0.8% in September. Energy prices year-over-year fell 9.2%.

Overall food prices for the month moved up 0.2% after having been unchanged a month earlier. Food prices increased 3.9% year-on-year for a second straight time.

Excluding the more volatile food and energy components, so-called core consumer prices were also unchanged in October following their September advance of 0.2%.

Prices for used cars and trucks dipped 0.1% after jumping 6.7%, which was the biggest monthly gain since February 1969. They are 11.5% from a year ago. New vehicle prices rose 0.4%, compared to 0.3% previously, and they are 1.5% higher year-over-year.

"The index for shelter increased 0.1 percent in October, which was offset by a 0.4-percent decrease in the index for medical care. The indexes for airline fares, recreation, and new vehicles were among those to rise, while the indexes for motor vehicle insurance, apparel, and household furnishings and operations declined," the report noted.

Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. The index accounts for about one-third of the entire CPI.

In the headline figure, U.S. inflation climbed 1.2% in the 12 months through October after rising 1.4% previously. As recently as May, the rate registered at 0.1% for the weakest 12-month gain since September 2015. In contrast, they started 2020 at 2.5%.

Core inflation rose 1.6% over the past year following two straight 1.7% increases. Earlier in the year (both in May and in June), the core rate at 1.2% was the lowest since March 2011. It kicked off 2020 at 2.3% with the highest 12-month level this year in February at 2.4%.

"Core inflation seems unlikely to revive until the pandemic is over, at which point the wave of demand we’re expecting, as the reopened services sector meets the bulging bank accounts of households deprived of opportunities to spend, could easily lead to a rapid widening of margins," Ian Shepherdson, chief economist at Pantheon Macroeconomics Ltd., said in a note according to Bloomberg News.

The core, "all items less food and energy" index 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 its key interest rate.

The following table of key inflation figures is for the last seven months through October, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on Nov. 12, 2020. To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.

April 2020 to October 2020 Consumer Prices – Gains & Losses in Percent

  April 2020 May 2020 June 2020 July 2020 August 2020 September 2020 October 2020 12 Month
All items -0.8 -0.1 0.6 0.6 0.4 0.2 .0 1.2
  Food 1.5 0.7 0.6 -0.4 0.1 .0 0.2 3.9
    Food at home 2.6 1.0 0.7 -1.1 -0.1 -0.4 0.1 4.0
    Food away from home 0.1 0.4 0.5 0.5 0.3 0.6 0.3 3.9
  Energy -10.1 -1.8 5.1 2.5 0.9 0.8 0.1 -9.2
    Energy commodities -20.0 -3.5 11.7 5.3 2.0 -0.1 -0.5 -18.1
      Gasoline (all types) -20.6 -3.5 12.3 5.6 2.0 0.1 -0.5 -18.0
      Fuel oil -15.6 -6.3 10.2 4.3 3.9 -5.3 -0.3 -28.2
    Energy services 0.1 -0.5 -0.2 .0 -0.2 1.6 0.8 1.4
      Electricity 0.1 -0.8 -0.3 0.3 -0.2 0.9 1.2 1.3
      Utility (piped) gas service 0.2 0.8 .0 -1.0 -0.2 4.2 -0.7 1.8
  All items less food, energy -0.4 -0.1 0.2 0.6 0.4 0.2 .0 1.6
    Commodities less food, energy -0.7 -0.2 0.2 0.7 1.0 0.8 -0.2 1.2
      New vehicles .0 0.3 .0 0.8 .0 0.3 0.4 1.5
      Used cars and trucks -0.4 -0.4 -1.2 2.3 5.4 6.7 -0.1 11.5
      Apparel -4.7 -2.3 1.7 1.1 0.6 -0.5 -1.2 -5.5
      Medical care -0.1 0.1 0.2 .0 -0.1 .0 -0.8 -0.8
    Services less energy -0.4 .0 0.3 0.6 0.2 .0 0.1 1.7
      Shelter .0 0.2 0.1 0.2 0.1 0.1 0.1 2.0
      Transportation -4.7 -3.6 2.1 3.6 .0 -0.9 0.1 -5.1
      Medical care 0.5 0.6 0.5 0.5 0.1 .0 -0.3 3.7

 

The BLS tends to release inflation data around the middle of a month based on consumer prices surveyed in the previous month. The Consumer Price Index (CPI) for November and the latest annual period become public on Dec. 10, 2020.

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

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