| Consumer Price Index |
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Released On 10/19/2011 8:30:00 AM For Sep, 2011
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Prior | Consensus | Consensus Range | Actual |
| CPI - M/M change | 0.4 % | 0.3 % | 0.0 % to 0.4 % | 0.3 % | | CPI - Y/Y change | 3.8 % | | | 3.9 % | | CPI less food & energy | 0.2 % | 0.2 % | 0.0 % to 0.2 % | 0.1 % | | CPI less food & energy - Y/Y change | 2.0 % | | | 2.0 % |
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Highlights
Headline inflation for the consumer remained on the warm side while core inflation softened. The consumer price index in September increased 0.3 percent, following a 0.4 percent jump the month before. The latest number matched the consensus forecast. Excluding food and energy, the CPI posted a mild 0.1 percent boost after rising 0.2 percent in August. The market expectation was for a 0.2 percent gain.
Turning to major components, energy increased a strong 2.0 percent after rising 1.2 percent in August. Gasoline spurted 2.9 percent higher after increasing 1.9 percent in August. Food price inflation continued hot, rising 0.4 percent in September after accelerating to a 0.5 percent pace the month before.
Within the core, apparel declined 1.1 percent after a series of strong gains. Recreation dipped 0.1 percent. Used vehicles fell 0.6 percent while new vehicles were flat. Also, shelter cost inflation slowed to a 0.1 percent rise after two moderately strong gains.
Year-on-year, overall CPI inflation rose to 3.9 percent from 3.8 percent (seasonally adjusted) in August. The core rate held steady at 2.0 percent on a year-ago basis. On an unadjusted year-ago basis, the headline number was up 3.9 percent in September and the core was up 2.0 percent.
Today's report was more encouraging than yesterday's PPI report. However, energy and food components are remaining stubbornly strong despite softening in the core. The September CPI report will not encourage the inflation hawks within the Fed to back down.
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Market Consensus before announcement
The consumer price index in August barely slowed to a 0.4 percent increase, following a strong 0.5 percent jump in July. Excluding food and energy, the CPI rose 0.2 percent, matching the pace the month before. For major components, energy continued to rise with a 1.2 percent increase after rebounding 2.8 percent in July. Gasoline increased 1.9 percent, following a 4.7 percent jump in July. Food price inflation accelerated, rising 0.5 percent after jumping 0.4 percent the prior month. Within the core, shelter and apparel were the biggest contributors to the gain.
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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
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![[Chart]](showimage.asp?imageid=21527)
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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
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![[Chart]](showimage.asp?imageid=21528)
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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
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