The Bureau of Labor Statistics released the Consumer Price Index — CPI — data for October this morning. Year-over-year Headline CPI came in at 3.53%, which the BLS rounds to 3.5%, down from 3.87% last month. Year-over year-Core CPI came in at 2.10%, up from 1.97% last month.
Here are excerpts from the BLS summary:
The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.1 percent in October on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.5 percent before seasonal adjustment.
A decline in the energy index more than offset small increases in the indexes for food and all items less food and energy to create the all items decline. The energy index turned down in October after increasing in each of the three previous months as the gasoline and household energy indexes declined after a series of seasonally adjusted increases. The food index rose in October, but posted its smallest increase of the year as the fruits and vegetables index declined sharply.
The index for all items less food and energy increased 0.1 percent in October; this was the same increase as last month and matches its smallest increase of the year. While the shelter and medical care indexes accelerated in October and the apparel index turned up, the indexes for new vehicles, used cars and trucks, airline fare, and recreation all declined. More…
The Briefing.com consensus forecast was for no change month-over-month. Core CPI month-over-month came in at 0.1%, which in line with the 0.1% consensus.
The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since 1957. The second chart gives a close-up of the two since 2000.
On this chart, I’ve highlighted the 1.75% – 2% range, which is generally understood to be the Fed’s target for core inflation. Here we see more easily see the widening spread between headline and core CPI since late 2010, although the headline rate of change has moderated over the past few months and declined in October.
Federal Reserve policy, which focuses on core inflation, and especially the core Personal Consumption Expenditures PCE, will see that the latest core CPI is beginning to move above the top of the target range.
Doug Short Ph.d is the author of dshort.com.