Keeping you up to date on the latest data releases.
The CPI rose at an annualized rate of 2.8 percent in October, though the release noted that 90 percent of that increase was due to spiking gasoline prices (household energy prices jumped up as well). Measures of underlying inflation trends continued to hover around zero. The core CPI was flat during the month, while the median and 16 percent trimmed-mean measures rose 1.1 percent and 0.6 percent, respectively. Newswires will likely highlight that the 12-month percent change in the core CPI fell to a fresh all-time low of 0.6 percent in October (the data goes back to 1957). We might stress that the core CPI is looking more like the longer-run trends in the median and the trimmed-mean CPI, which are up 0.5 percent and 0.8 percent over the past twelve months. Over the past six months, these measures of underlying inflation are ranging between 0.8 percent and 0.9 percent. The underlying price-change distribution looked fairly similar to its average over the past six months (at least on the low end), with roughly 50 percent of the index (by expenditure weight) rising at rates of less than 1.0 percent. On the upper-end, just 12 percent of the consumers’ market basket exhibited price increases in excess of 3.0 percent, down from an average of 23 percent over the six months prior. Among the major components, OER increased at an annualized rate of 1.0 percent in October, somewhat higher than its near-term (3-month) annualized growth rate of 0.5 percent. Rent of primary residence rose 0.6 percent in October. Also, medical care services rose 2.0 percent during the month, though this is somewhat below its 12-month growth rate of 3.6 percent. It appears that the prices of a few discretionary spending components (recreation, apparel, household furnishing) continued to decrease in October. In fact, recreation prices have fallen in each of the past four months and is now down 1.0 percent on a year-over-year basis. An alternative glance at the consumers’ market basket, by price-stickiness, revealed that core flexible prices (those items more likely to exhibit transitory price changes) fell at an annualized rate of 4.6 percent in October. The more forward-looking sticky-price components of the market basket rose 0.8 percent during the month, and have really moved around a lot over the past six months or so (which isn’t much of a surprise given that they’re “sticky”). Over the past 12 months, the series is up 0.7 percent, which is consistent with the softness seen in our other measures of underlying inflation.