| Consumer Price Index |
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Released On 11/16/2011 8:30:00 AM For Oct, 2011
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Prior | Consensus | Consensus Range | Actual |
| CPI - M/M change | 0.3 % | 0.0 % | -0.1 % to 0.1 % | -0.1 % | | CPI - Y/Y change | 3.9 % | | | 3.6 % | | CPI less food & energy | 0.1 % | 0.1 % | 0.1 % to 0.2 % | 0.1 % | | CPI less food & energy - Y/Y change | 2.0 % | | | 2.1 % |
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Highlights
Consumer price inflation finally softened in October at the headline level. The consumer price index in October declined 0.1 percent, following a 0.3 percent boost in September. The October figure came in lower than analysts' forecast for no change. Excluding food and energy, the CPI rose a modest 0.1 percent, matching September's gain and the consensus projection.
By major components, energy declined 2.0 percent, following a jump of 2.0 percent in September. Gasoline dropped 3.1 percent after spurting 2.9 percent higher in September. Food price inflation softened to a 0.1 percent rise after jumping 0.4 percent. Within the core, upward pressure was seen in medical care and apparel with declines in new vehicles and used cares partially offsetting.
Year-on-year, overall CPI inflation slowed to 3.6 percent from 3.9 percent in September (seasonally adjusted) in August. The core rate nudged up to 2.1 percent from 2.0 percent the month before on a year-ago basis. On an unadjusted year-ago basis, the headline number was up 3.5 percent in October, compared to 3.9 percent in September. The core was up 2.1 percent, compared to 2.0 percent the month before.
Today's numbers are consistent with the Fed's hope for an easing in inflation. However, the headline number will be under upward pressure in November from the rebound in crude oil prices.
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Market Consensus before announcement
The consumer price index in September increased 0.3 percent, following a 0.4 percent jump the month before. In contrast, excluding food and energy, the CPI posted a mild 0.1 percent boost after rising 0.2 percent in August. Turning to major components, energy increased a strong 2.0 percent after rising 1.2 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.
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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=21662)
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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=21663)
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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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