November 2018 CPI: Year-Over-Year Inflation Rate Moderates To 2.2%

According to the BLS, the Consumer Price Index (CPI-U) year-over-year inflation rate was 2.2 % year-over-year (lower than the 2.5 % last month) - unchanged month-over-month. The year-over-year core inflation (excludes energy and food) rate marginally grew from 2.1 % to 2.2 %, and continues to be above the target set by the Federal Reserve.

Analyst Opinion of the Consumer Price Index

Energy was the main driver for the year-over-year decline. Core inflation remains above 2.0 % year-over-year. Medical cost inflation continues to outpace the CPI-U.

The market expected (from Econoday):

  Consensus Range Consensus Actual
CPI-U - month-over-month (MoM) -0.1 % to +0.3 % +0.0 % +0.0 %
CPI-U year-over-year (YoY) +2.1 % to +2.4 % +2.2 % +2.2 %
CPI less food & energy (MoM) -0.2 % to +0.3 % +0.2 % +0.2 %
CPI less food & energy (YoY) +2.2 % to +2.3 % +2.2 % +2.2 %

As a generalization - inflation accelerates as the economy heats up, while inflation rate falling could be an indicator that the economy is cooling. However, inflation does not correlate well to the economy - and cannot be used as an economic indicator.

The major influence on the CPI was energy.

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.

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