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2008 Economic Calendar |
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Resource Center » U.S. & Intl Recaps | Release Dates | Why Investors Care | Today's Calendar
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The Consumer Price Index is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly changes in the CPI represent the rate of inflation. Why Investors Care
| Released on 11/15/07 For Oct 2007 | |||||||||||||||||||||||||
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Highlights
Consumer price inflation in October was a little on the high side overall due to energy costs while the core rate was unchanged at 0.2 percent. The overall consumer price index in October rose 0.3 percent in October, equaling the gain in September and matching market expectations. For October, the core CPI inflation rate increased 0.2 percent, after rising 0.2 percent in each of the prior four months. The markets expected a 0.2 percent gain in the core rate.
Year-on-year, the overall CPI jumped to up 3.5 percent in October from 2.8 percent in September. The core rate was unchanged at 2.1 percent in October on a year-on-year basis.
Once again, higher energy prices boosted the overall CPI in October. In the non-expenditure category for energy, prices spiked 1.4 percent, following a 0.3 percent rise in September. For October, motor fuel was up 1.5 percent; fuel oil up was up 2.6 percent; and piped gas & electricity was up 1.3 percent. Food price inflation eased in October but was still contributing to somewhat high headline inflation with a 0.3 percent increase, following a 0.5 percent jump in September.
Inflation was mixed according to expenditure category. On the high side in October were medical care, up 0.6 percent; transportation, up 0.4 percent; education & communication, up 0.4 percent; food & beverages, up 0.3 percent; and recreation, up 0.3 percent. On the soft side were apparel, flat; housing, up 0.2 percent; and "other," up 0.2 percent.
On an unrounded basis, the core CPI in October increased modest 0.15870 percent, compared to a rise of 0.21964 percent in September.
The October CPI report shows cored inflation steady but overall inflation is above the Fed's comfort zone. With Fed Chairman Ben Bernanke shifting focus somewhat to headline inflation, the issue of rising energy costs certainly has the Fed's attention. With a healthy Empire State manufacturing index out this morning and a soft initial claims number, markets will be scratching their heads on which way to go. Company news will likely take front stage.
The consumer price index jumped at the headline level in September with a 0.3 percent rebound, following a 0.1 percent dip in August. But the core CPI inflation rate rose 0.2 percent, after rising 0.2 percent in each of the prior three months. Of course, the recent spike in crude oil prices should continue to keep upward pressure on the overall CPI. The core rate has been stuck at the upper portion of the Fed's comfort zone and the Fed clearly would like to see some lower core numbers. The question is whether higher oil prices are starting to feed into core inflation along with higher import prices or whether slower consumer spending is keeping core inflation contained.
CPI Consensus Forecast for October 07: +0.3 percent
Range: +0.2 to +0.4 percent
CPI ex food & energy Consensus Forecast for October 07: +0.2 percent
Range: +0.1 to +0.2 percent
![[Chart]](chart.gif)
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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. |
![[Chart]](chart_1.gif)
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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. |
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