Price Increase Details Provide A Pleasant Surprise

( )- The consumer price index rose less than expected in October, indicating that while inflation continues to be a threat to the US economy, pressures could be starting to cool.

According to the Bureau of Labor Statistics, the index increased only 0.4 percent in October and 7.7 percent from a year ago.

Excluding food and energy costs, the core CPI increased 0.3 percent for October and 6.3 percent from a year ago.

Helping bring down the inflation figures was a 2.4 percent decline in used automobile prices. Apparel prices also fell by 0.7 percent while medical care services were lower by 0.6 percent.

Moody Analytics chief economist Mark Zandi said October’s report suggests that inflation “has definitely peaked and is rolling over.” He said that based on all the trend lines, inflation will “continue to moderate going forward, assuming that nothing goes off the rails.”

However, the Fed remains cautious.

San Francisco Fed President Mary Daly noted that one month of positive data “does not a victory make.”

During a Q&A with the European Economics & Financial Center, Daly said the Fed remains “resolute” about bringing inflation down to 2 percent on average. To meet that goal, she explained, the Fed would “continue to adjust policy.”

The October data wasn’t all rosy, however.

Shelter costs, which account for about one-third of the CPI, rose 0.8 percent in October, the largest monthly gain in over 30 years. Shelter costs were up 6.9 percent from last year, their highest annual increase since 1982.

Fuel oil prices skyrocketed 19.8 percent higher for the month and were up 68.5 percent from last year.

The food index rose 0.6 percent for the month and 10.9 from last year while energy was up 1.8 percent for the month and 17.6 percent from last year.

Real average hourly earnings declined again in October by 0.1 percent for the month and were down 2.8 percent from last year.