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CPI: Core Steady at 1.7%, Touch Lower Than Expected

October 13, 2017
Bottom Line: Headline consumer inflation increased in September as higher gasoline prices drove energy higher. Consumer prices are now 2.2% above their year ago level. Meanwhile, core consumer prices rose modestly and are 1.7% above their year ago level. Owners' Equivalent Rent (a major component of CPI that is an estimate of the cost of shelter) rose by 0.2%, less than last month and up 3.2% year-over-year. The trend rate in this component now appears to be stable, a touch below the pace of 2016 and above the pace of 2015. Overall inflationary pressures at the consumer level still remain modest. Finally, the Labor Department only a modest impact in its data collection from the hurricanes.

The CPI ROSE by 0.5% in September, compared with market expectations for an increase of 0.6%.

  • Food prices increased by 0.1% while energy prices rose by 6.1%.
  • Prices for gasoline rose by 13.1% while prices for fuel oil increased by 5.2%, prices for electricity climbed by 0.01%, but prices for natural gas fell by 0.8%.
  • Energy prices are now 10.2% ABOVE their year ago level.
  • Overall consumer prices are now 2.2% ABOVE their year ago level; in September 2016, consumer prices were 1.5% ABOVE their year ago level.

The Core CPI ROSE by 0.1%, compared with market expectations for an increase of 0.2%.

  • Prices for commodities excluding food and energy commodities fell by 0.2%.
  • Gains in tobacco (+0.4%), alcoholic beverages (+0.4%), were offset by declines in medical care (-0.8%), new vehicles (-0.4%).
  • Prices for services excluding energy services rose 0.2% with moderate increase in transportation (+0.3%), shelter (+0.3%), and owner's equivalent rent (+0.2%).
Core consumer prices are now 1.7% ABOVE their year ago level; in September 2016, consumer prices were 2.2% ABOVE their year ago level.