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CPI: Core Inches Higher, As Clothing Prices Drop But Medical Costs Rise

November 13, 2019

Bottom Line: Core consumer price inflation edged higher by 0.16% in October as inflation in medical care services accelerated while apparel price deflation continued. Owner's Equivalent Rent, a key measure of the price of shelter, has decelerated after some volatility -- 2.2% annualized over the last three months versus 2.8% and 3.3% over the last six months and 12 months, respectively. Overall, core inflation trends are turning modestly slower again after a period of modest upward pressure.

The CPI ROSE by 0.36% in October, compared with market expectations for an increase of 0.30%.

  • Food prices increased by 0.24% while energy prices rose by 2.7%.
  • Prices for gasoline fell by 2.4% while prices for fuel oil declined by 1.1%, and prices for natural gas fell by 0.7%. Energy prices are now 4.1% BELOW their year ago level.
  • Overall consumer prices are now 1.8% ABOVE their year ago level; in October 2018, consumer prices were 2.5% ABOVE their year ago level.
The Core CPI ROSE by 0.16%, compared with market expectations for an increase of 0.20%.

  • Prices for commodities excluding food and energy commodities fell by 0.1%.
  • Gains in used cars & trucks (+1.3%), medical care (+1.2%), were offset by declines in apparel (-1.8%), tobacco (-0.4%).
  • Prices for services excluding energy services rose 0.2% with moderate increase in medical care services (+0.9%), owner's equivalent rent (+0.2%), and transportation (+0.1%).
  • Core consumer prices are now 2.3% ABOVE their year ago level; in October 2018, consumer prices were 2.2% ABOVE their year ago level.

Article by Contingent Macro Advisors