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Consumer Price Index
Released On 11/18/2009 8:30:00 AM For Oct, 2009
PriorConsensusConsensus RangeActual
CPI - M/M change0.2 %0.2 %0.1 % to 0.3 %0.3 %
CPI - Y/Y change-1.3 %-0.2 %
CPI less food & energy0.2 %0.1 %0.0 % to 0.2 %0.2 %
CPI less food & energy - Y/Y change1.5 %1.7 %

Highlights
Consumer price inflation was warmer than expected. Headline consumer price inflation firmed to a 0.3 percent boost after rising 0.2 percent the month before. The market had forecast a 0.2 percent gain. Core CPI inflation was unchanged with a 0.2 percent increase and was above consensus expectations for a 0.1 percent rise. But some of core strength appears to be temporary.

First, boosting the headline number was a 1.5 percent jump in energy prices after a 0.6 percent rise in September. Gasoline was up 1.6 percent, following a 1.0 percent increase. Food price inflation was restrained in October with a 0.1 percent rise, following a 0.1 percent dip the month before.

The core rate was driven up by vehicle prices for the most part. According to the BLS, the indexes for used cars and trucks and for new vehicles both rose sharply and together they accounted for over 90 percent of the increase in the index for all items less food and energy. The index for new & used vehicles jumped 1.7 percent after a 0.5 percent rise in September. The indexes for airline fares and medical care also increased, by 1.7 percent and 0.4 percent, respectively. Indicating softness in the underlying trend for the core, the shelter index was unchanged and the indexes for apparel and recreation declined.

Year-on-year, headline inflation increased to minus 0.2 percent (seasonally adjusted) from down 1.3 percent in September. The core rate firmed to up 1.7 percent in October from up 1.5 percent in September. On an unadjusted year-ago basis, the headline number was down 0.2 percent in October while the core was up 1.7 percent.

Overall, inflation outside of energy likely is not accelerating but neither is it as subdued as the Fed probably prefers. Treasury yields generally firmed on the news despite lower housing starts announced at the same time.

Market Consensus before announcement
The consumer price index at the headline level in September eased to a 0.2 percent gain after jumping 0.4 percent in August. The slowing was due to a dip in food prices and a dramatically slower gain in energy costs. Core CPI inflation firmed slightly, rising 0.2 percent after a 0.1 percent increase in August. Higher oil prices indicate that the headline CPI will be firm in October.

Definition
The Consumer Price Index is a measure of the change in the average price level of a fixed basket of goods and services purchased by consumers. That is the index shows the change in price levels since the index base period, currently 1982-84 = 100. Monthly changes in the CPI represent the rate of inflation.  Why Investors Care
 
[Chart]
It is always a good idea to look at more than a few months of data to get a sense of changes in established trends. Monthly changes in the CPI are mainly volatile because of sharp fluctuations in food and energy prices. The core CPI eliminates the sharper fluctuations.
Data Source: Haver Analytics
 
[Chart]
Yearly changes tend to smooth out more severe monthly fluctuations and give a better idea of the underlying rate of inflation. Even with the smoother trend, note that the core CPI does not fluctuate as much as the total CPI.
Data Source: Haver Analytics
 

 

2009 Release Schedule
Released On: 1/162/203/184/155/156/177/158/149/1610/1511/1812/16
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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