November Consumer Prices

Inflation as measured by the Consumer Price Index (CPI) was unchanged in November according to the Bureau of Labor Statistics. Despite being flat for the month, following a 0.1% October decline, the year-over-year change gained 0.3% to register a 1.2% increase at the headline level. Once again a decline (1.0%) in the energy component of this indicator (it was off 1.7% the month prior) pulled that total down. Food prices, up 0.1%, the same rate of increase we saw in October, helped pull it back up to zero.

To get the core CPI, we remove the effect of changes in energy and food prices. For November the core rose 0.2%, yet its Y/Y rate of change held steady at a 1.7% increase.

Our Federal Reserve has consistently suggested they would like to see inflation a tad higher, around the 2% level. In their most recent statement they allowed for it to surpass that figure, encroaching on 2.5% or more for a bit, before they will begin to raise their base interest rates which now reside practically at zero. November’s increase in the CPI is probably seen by them in a favorable light, but their concern that it could begin to decline again will likely keep their rate policy right where it is for some time to come. (by J R)