CPI little changed but oil now at $100

Oct CPI fell .1% vs expectations of flat but core CPI rose .1%, in line with estimates. The y/o/y gain is 3.5% headline and 2.1% ex f&f. To put the 3.5% rate in perspective, avg hourly earnings in Oct rose just 1.8% y/o/y and the national average for a 1 yr CD is .35% according to Bankrate.com. Energy prices fell by 2% while food prices rose only .1%. Owners Equivalent Rent, 25% of CPI, rose .2% but interestingly, Rent of Primary Residence rose .4% for the 2nd month in the past 3. Landlords having pricing power and that will start to filter into OER. Vehicle prices fell by .4% and commodities overall fell by .4%. Medical care rose .5%, the biggest rise since Feb and apparel prices rose by .4%. Bottom line, notwithstanding a lackluster economy not just in the US but elsewhere, inflation is remaining sticky (aka, stagflation) and with crude oil now back to $100, CPI readings will be heading higher in the months to come.

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