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CPI: Core Mostly Steady at 1.8%, Touch Higher Than Expected

November 15, 2017
Bottom Line: Headline consumer inflation moderated in October as energy prices declined. Core CPI accelerated just slightly more than expected with owner's equivalent rent now up 4.3% annualized over the last 3 months, faster than the pace of the last 6- and 12-months, 3.4 and 3.2%, respectively. While this bears watching, it doesn't yet represent a shift higher in the trend rate. Other categories saw normal volatility with a rebound in medical care and service prices but declines in apparel and new car prices.

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

  • Food prices increased by 0.04% while energy prices fell by 1.0%.
  • Prices for gasoline fell by 2.4% while prices for fuel oil increased by 0.6%, prices for electricity climbed by 0.5%, and prices for natural gas rose by 0.3%.
  • Energy prices are now 6.4% ABOVE their year ago level.

Overall consumer prices are now 2.0% ABOVE their year ago level; in October 2016, consumer prices were 1.6% ABOVE their year ago level.

The Core CPI ROSE by 0.2%, compared with market expectations for an increase of 0.2%. Prices for commodities excluding food and energy commodities rose by 0.1%.

  • Gains in tobacco (+1.6%), used cars & trucks (+0.7%), were offset by declines in new vehicles (-0.2%), apparel (-0.1%).
  • Prices for services excluding energy services rose 0.3% with moderate increase in shelter (+0.3%), owner's equivalent rent (+0.3%), and medical care services (+0.3%).

Core consumer prices are now 1.8% ABOVE their year ago level; in October 2016, consumer prices were 2.2% ABOVE their year ago level.