Consumer Price Index: November Headline At 2.18%

The Bureau of Labor Statistics released the November Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.18%, down from 2.52% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.21%, up from the previous month's 2.14% and above the Fed's 2% PCE target.

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) was unchanged in November on a seasonally adjusted basis after rising 0.3 percent in October, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.2 percent before seasonal adjustment.

The gasoline index declined 4.2 percent in November, offsetting increases in an array of indexes including shelter and used cars and trucks. Other major energy component indexes were mixed, with the index for fuel oil falling but the indexes for electricity and natural gas rising. The food index rose in November, with the indexes for food at home and food away from home both increasing.

The all items less food and energy index increased 0.2 percent in November. Along with the indexes for shelter and used cars and trucks, the indexes for medical care, recreation, and water and sewer and trash collection also increased. The indexes for wireless telephone services, airline fares, and motor vehicle insurance declined in November.

The all items index increased 2.2 percent for the 12 months ending November, compared to a 2.5-percent increase for the period ending October. The all items less food and energy index rose 2.2 percent in November. The energy index increased 3.1 percent for the 12 months ending November; this was its smallest 12-month increase since the period ending June 2017. The food index rose 1.4 percent over the last 12 months. [More…]

Investing.com was looking for no MoM change in seasonally adjusted Headline CPI and 0.2% in Core CPI. Year-over-year forecasts were 2.2% for Headline and 2.2% 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.

Headline and Core CPI since 2000

 

The next chart shows both series since 1957, the year the government first began tracking Core Inflation.

Headline and Core CPI

 

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 above the PCE target range of 2 percent.

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