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Wednesday, October 22, 2014

Consumer Prices Basically Flat In September

Consumer price inflation for September came in soft although the headline number was marginally above forecasts.

Overall consumer prices in September firmed 0.1 percent after falling 0.2 percent in August. Market expectations were for no change. Excluding food and energy, the CPI also nudged up 0.1 percent, following no change in August. The consensus was for a 0.1 percent increase in September.

Energy slipped 0.7 percent, following a drop of 2.6 percent in August. Gasoline declined 1.0 percent, following a 4.1 percent drop in August. Food price inflation gained 0.3 percent after posting a 0.2 percent gain in August.

The index for all items less food and energy increased 0.1 percent in September. Along with the shelter index, the index for medical care increased, and the indexes for alcoholic beverages and for personal care advanced slightly. Several indexes were unchanged, and the indexes for airline fares and for used cars and trucks declined in September.

On a seasonally adjusted basis, the headline CPI was up year-ago 1.7 percent in September-matching August. Excluding food and energy, the year-ago pace was 1.7 percent, also equaling the August pace.

Currently, inflation is soft and not leading the Fed to hurry the first increase in the fed funds rate next year. Fed funds futures suggest that first rise will be in the second half.


Recent History Of This Indicator:
The consumer price index took at least a temporary break in August. Both the headline CPI and core number came in lower than expected-giving Fed doves room to stay loose on policy. Overall consumer prices fell 0.2 percent in August after rising 0.1 percent in July. Excluding food and energy, the CPI was unchanged after gaining only 0.1 percent the month before. Energy dropped a monthly 2.6 percent, following a dip of 0.3 percent in July. Gasoline prices fell a sharp 4.1 percent, following a 0.3 percent decrease in July. Food price inflation decelerated to a 0.2 percent gain after jumping 0.4 percent in July. On a seasonally adjusted basis, the headline CPI was up year-ago 1.7 percent in August-down from 2.0 percent in July. Excluding food and energy, the year-ago pace was 1.7 percent also, easing from 1.9 percent in July.

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