The November CPI came in roughly as expected, with the headline number increasing 0.1 per cent, slightly less than in October as rises in energy prices slowed.
And after four straight months of remaining flat, core inflation also climbed 0.1 per cent, which the BLS attributed mostly to increases in the price of shelter and airline fares. Falling in November were the costs of new vehicles, used cars and trucks, and household furnishings.
Here’s the chart we’ve been worrying about in previous months:
In the year through October, the 0.6 per cent rise had been the smallest 12-month increase since the index was started in 1957. That the number has ticked back up to 0.8 per cent through November is a relief, if not much of one.
And a further breakdown from the BLS on how prices in a variety of sectors have behaved in the past year:
The shelter index has gone up 0.2 percent over that time period, the medical care index has risen 3.2 percent, and the index for used cars and trucks has increased 6.0 percent. In contrast, the indexes for household furnishings and operations has declined, falling 2.5 percent, and the new vehicles index has fallen 0.4 percent. The apparel and recreation indexes have decreased as well, falling 0.8 percent and 0.9 percent, respectively.
QE2 succeeded in raising inflation expectations, but it will be some time before we know how well they will translate into actual inflation.
It certainly hasn’t happened yet. With consumer inflation hovering near the one per cent mark — and the recent convergence between the CPI and the Fed’s preferred PCE index — don’t expect this month’s modest uptick to influence the Fed in one direction or another.
Related link:
Inflation as (un)expected – FT Alphaville