Consumer Price Index: October Headline at 7.75%, Smallest YoY Increase Since Jan 2020
The Bureau of Labor Statistics released the October Consumer Price Index data last week. The year-over-year non-seasonally adjusted Headline CPI came in at 7.75%, down from 8.20% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 6.28%, down from 6.63% the previous month.
Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data:
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in October on a seasonally adjusted basis, the same increase as in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 7.7 percent before seasonal adjustment.
The index for shelter contributed over half of the monthly all items increase, with the indexes for gasoline and food also increasing. The energy index increased 1.8 percent over the month as the gasoline index and the electricity index rose, but the natural gas index decreased. The food index increased 0.6 percent over the month with the food at home index rising 0.4 percent.
The index for all items less food and energy rose 0.3 percent in October, after rising 0.6 percent in September. The indexes for shelter, motor vehicle insurance, recreation, new vehicles, and personal care were among those that increased over the month. Indexes which declined in October included the used cars and trucks, medical care, apparel, and airline fares indexes.
The all items index increased 7.7 percent for the 12 months ending October, this was the smallest 12month increase since the period ending January 2022. The all items less food and energy index rose 6.3 percent over the last 12 months. The energy index increased 17.6 percent for the 12 months ending October, and the food index increased 10.9 percent over the last year; all of these increases were smaller than for the period ending September. Read more
Investing.com was looking for a 0.4% MoM change in seasonally adjusted Headline CPI and a 0.5% in Core CPI. Year-over-year forecasts were 8.1% for Headline and 6.5% for Core.
The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since the turn of the century. The highlighted two percent level is the Federal Reserve's Core inflation target for the CPI's cousin index, the BEA's Personal Consumption Expenditures (PCE) price index.
The next chart shows both series since 1957, the year the government first began tracking Core Inflation.
In the wake of the Great Recession, two percent has been the Fed's target for core inflation. However, at their December 2012 FOMC meeting, the inflation ceiling was raised to 2.5% while their accommodative measures (low Fed Funds Rate and quantitative easing) were in place. They have since reverted to the two percent target in their various FOMC documents.
Federal Reserve policy, which in recent history has focused on core inflation measured by the core PCE Price Index, will see that the more familiar core CPI is now well above the PCE target range of 2 percent.
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