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CPI: Core Edges Up Again, Led By Shelter

December 11, 2019

Bottom Line: Core consumer price inflation rose 0.23% in November as used card prices, medical care, and cell phone prices inched higher while alcohol and airfare prices fell slightly. Owner's Equivalent Rent, a key measure of the price of shelter, was up 0.24% but has decelerated after some volatility, up 2.7% annualized over the last three months versus 2.8% and 3.3% over the last six months and 12 months, respectively. Overall, core inflation remains muted and is turning modestly slower again after a period of modest upward pressure.

The CPI ROSE by 0.26% in November, compared with market expectations for an increase of 0.20%.

  • Food prices increased by 0.12% while energy prices rose by 0.8%.
  • Prices for gasoline rose by 1.1% while prices for fuel oil increased by 0.8%, prices for electricity climbed by 0.3%, and prices for natural gas rose by 1.1%.
  • Energy prices are now 0.6% BELOW their year ago level.
Overall consumer prices are now 2.0% ABOVE their year ago level; in November 2018, consumer prices were 2.2% ABOVE their year ago level.

The Core CPI ROSE by 0.23%, compared with market expectations for an increase of 0.20%.
  • Prices for commodities excluding food and energy commodities were flat.
  • Gains in tobacco (+0.8%), used cars & trucks (+0.6%),
    were offset by declines in alcoholic beverages (-0.3%), new vehicles (-0.1%).
  • Prices for services excluding energy services rose 0.3% with moderate increase in medical care services (+0.4%), shelter (+0.3%), and owner's equivalent rent (+0.2%).
  • Core consumer prices are now 2.3% ABOVE their year ago level; in November 2018, consumer prices were also 2.3% ABOVE their year ago level.

Article by Contingent Macro Advisors