Headline Inflation Slips to 0.96% Year-over-Year,
Core Inflation Unchanged
The Bureau of Labor Statistics released the latest CPI data this morning. Year-over-year unadjusted Headline CPI came in at 0.96%, which the BLS rounds to 1.0%, down from 1.18% last month (rounded to 1.2%). Year-over-year Core CPI (ex Food and Energy) came in at 1.68% (rounded to 1.7%), down from last month's 1.73% (rounded to 1.7%).
Here is the introduction from the BLS summary, which leads with the seasonally adjusted data monthly data:
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 1.0 percent before seasonal adjustment.
The gasoline index fell 2.9 percent in October and led to the seasonally adjusted decline in the all items index. Other energy indexes were mixed, with the electricity index rising, but the indexes for fuel oil and for natural gas declining. The food index rose slightly, with major grocery store food group indexes evenly split between advances and declines.
The index for all items less food and energy rose 0.1 percent in October. The shelter index rose, but posted its smallest increase since December 2012. The indexes for airline fares, for recreation, and for used cars and trucks also increased. The medical care index was unchanged, while the indexes for apparel, for household furnishings and operations, and for new vehicles all declined.
The all items index increased 1.0 percent over the last 12 months; this was the smallest 12-month increase since October 2009. The energy index has declined 4.8 percent over the last 12 months, its largest 12-month decline since July 2012. The index for all items less food and energy has risen 1.7 percent over the last year, while the food index has risen 1.3 percent. More...
The Investing.com consensus forecast was for a 0.1% MoM for both headline and Core CPI. Their YoY forecast for Core CPI was spot on at 1.7%. likewise spot on for Headline at 1.0%.
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 the chart below I've highlighted 2 to 2.5 percent range. Two percent has generally been understood to be the Fed's target for core inflation. However, the December 12 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low Fed Funds Rate and quantitative easing) are in place.
Federal Reserve policy, which has historically focused on core inflation, and especially the core Personal Consumption Expenditures (PCE), will see that the latest core CPI is below the near-term target range of 2 to 2.5 percent, and the more volatile headline inflation, is well below the target range.