US CPI CLOSER TO DEFLATION

US October Consumer Price Index ticked up just 0.2% after a 0.1% rise during September. So far this year the CPI has risen at a 0.9% annual rate following the 0.3% decline during all of last year.

The only real source of strength this year has been in energy prices. They rose 2.6% during October and at a 3.5% rate so far this year. Gasoline prices rose 4.6% last month and at a 5.1% rate since December. Fuel oil prices also were strong and rose 4.0% (NSA) last month and at a 6.4% rate this year but natural gas & electricity prices ticked up just 0.2%.  Food & beverage prices rose 0.2% last month and at a 1.6% annual rate this year.

Core CPI was unchanged for the third consecutive month. That lowered the y/y gain to 0.6%, the least since the series began in 1957. Year-to-date prices rose at an even slower 0.5% annual rate. Core goods prices fell 0.2% for the second month and they’re down at a 0.3% rate since December, despite a 5.8% rise in tobacco prices.

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