Keeping you up to date on the latest data releases.
slight 0.6 percent increase in November. On a year-over-year basis, the headline CPI continued to drift down toward underlying inflation measures, edging down from 3.3 percent to 3.0 percent during the month. Excluding food and energy components, the price index rose 1.8 percent, in line with its 3-month annualized growth rate, and down slightly from its 12-month growth rate of 2.2 percent. Our measures of underlying inflation—the median CPI and 16 percent trimmed-mean CPI—disagreed markedly in December. The median CPI rose 2.9 percent, while the trim was up just 1.5 percent. Interestingly, the spike up in the median during December exceeded its longer-run (12-month) growth rate of 2.2 percent, while the increase in the 16 percent trimmed-mean CPI is in line with its more subdued trend, which is down from its 12-month growth rate of 2.5 percent.
It appears that there are a few relative price changes that are causing the disparity. Rents are starting to accelerate. Rent of primary residence rose 3.1 percent in December, and has risen 3.5 percent over the past six months. Owners’ equivalent rent (OER) rose 2.2 percent in December and is up 2.3 percent over the past six months. Interestingly, all but one of the regional OER components we use to compute the median CPI posted an increase near 3.0 percent in December (the median component was OER: Midwest, which rose 2.9 percent). On the other hand, price increases in autos and apparel from earlier in the year continued to unwind in December, with apparel prices falling 1.4 percent and auto prices decreasing 5.0 percent. So while rents were pushing up on the median, decreasing apparel and auto prices were holding down the trim. Given that the weight of OER trumps that of apparel and autos, it likely means that underlying inflation was closer to the 16 percent trimmed-mean this month than the median. This would, in turn, suggest that inflation is continuing on its more subdued path than we saw in mid-2011.