Inflation Turned Down In November

Consumer price inflation turned down in November on sharply lower gasoline prices plus dips in some core subcomponents. Overall consumer price inflation fell 0.3 percent after no change in October. The November number was below market expectations for a 0.1 percent dip. Energy dropped 3.8 percent, following a 1.9 percent decline the month before. Gasoline plunged 6.6 percent in November after a 3.0 drop in October. Food rose 0.2 percent, following a 0.1 percent increase in October. Excluding food and energy, consumer price inflation posted at 0.1 percent in November easing from 0.2 percent in October. Analysts forecast a 0.1 percent gain.

Within the core, the shelter index rose 0.3 percent, and the indexes for medical care, airline fares, and alcoholic beverages also rose. In contrast, the indexes for apparel, used cars and trucks, recreation, household furnishings and operations, personal care, and new vehicles all declined in November.

On a seasonally adjusted basis, the headline CPI was up year-ago 1.3 percent versus 1.7 percent in October. Excluding food and energy, the year-ago rate was 1.7 percent, compared to 1.8 percent the prior month.

The latest CPI report gives the Fed room to keep monetary policy loose. However, there still likely will be lots of debate on timing of the next rate move and on guidance.

Recent History Of This Indicator:
The consumer price index in October was a flat 0.0 percent after firming 0.1 percent in September. Excluding food and energy, the CPI was warmer, gaining 0.2 percent after nudging up 0.1 percent in September. The consensus was for a 0.1 percent increase in October. Energy fell 1.9 percent after slipping 0.7 percent in September. Gasoline dropped 3.0 percent after declining 1.0 percent the month before. Food price inflation rose 0.1 percent, following a gain of 0.3 percent in September. With crude oil prices down further, the headline CPI will be soft and possibly negative.