Keeping you up to date on the latest data releases.
The headline CPI rose at an annualized rate of 1.8 percent in October, as gasoline prices posted a modest decrease and general price pressure elsewhere in the retail marketbasket was fairly tame (though rents did post sizeable increases). On a year-over-year basis the headline CPI is up 2.2 percent. Excluding food and energy prices, the “core” CPI rose 2.2 percent during the month, outpacing its near-term (three-month) growth rate of 1.5 percent, though it came in relatively close to its year-over-year growth rate of 2.0 percent. Our measures of underlying inflation, the median CPI and 16 percent trimmed-mean CPI, rose 2.3 percent and 1.7 percent, respectively. Over the past year, the median is up 2.2 percent, while the trim is up 1.9 percent. However, there does appear to be an upward nudge on October’s data stemming from rising shelter costs.
Shelter prices jumped up 3.2 percent in October, its sharpest monthly increase since March 2008. A significant chunk of this was rent of primary residence, which spiked up 5.1 percent in October, well above its 12-month trend of 2.8 percent. Also, owners’ equivalent rent (OER) rose 2.6 percent in October. OER has accelerated over the past three months, up 2.8 percent compared to its 12-month growth rate of 2.1 percent. Shelter costs comprise a little over 30 percent of the marketbasket (with OER accounting for roughly 25 percent alone) and have the propensity to influence the measured underlying inflation trend. As evidence of this, perhaps undue influence on our read of inflation, excluding OER from our trimmed-mean calculations pulls October’s increase in the median CPI down from 2.3 percent to a mere 0.4 percent increase. This is a marked difference from the recent trend. Over the prior three months, the median CPI excluding OER rose 2.3 percent, and is up 2.2 percent over the past year, numbers that lie nearly on top of the median CPI. The effect of excluding OER from the 16 percent trimmed-mean CPI nudges it’s increase down from 1.7 percent to 1.3 percent in October. The latter effect is roughly in line with that of the sticky CPI, which rose 2.4 percent in October and 1.9 percent after excluding shelter prices.