October 2017 Consumer Price Index

Prices Americans pay for goods and services increased in October 2017 according to the latest Consumer Price Index (CPI) data from the Bureau of Labor Statistics.  After jumping 0.5 percent in September, inflation decelerated to 0.1 percent.  Additionally, the year-over-year trend for this indicator eased to 2.0 percent from 2.2 percent.  Core-CPI, which excludes food and energy since they are volatile, accelerated to 0.2 percent from 0.1 percent a month earlier, and the year-over-year figure edged up one-tenth of a percentage point to 1.8 percent.

Can you hear inflation now?  For most months this year, wireless service prices were holding this indicator down.   However, mobile costs increased 0.4 percent in each of last two months.  If this trend continues, inflation readings compared to a year earlier may start accelerating in the months ahead.

Other prices are firming as well.  Housing costs managed an increase 0.3 percent.  This latest uptick followed gains of 0.4 percent and 0.2 percent in August and September respectively.  Costs for medical care services also increased 0.3 percent in the period.  However, not everything went up.  New cars dropped 0.2 percent in the period, and prescription drugs declined a similar amount. 

Central Bankers at the Federal Reserve were probably happy to see this indicator firming overall.  They have been raising the interest rate banks charge each other for overnight loans and have been signaling another increase will come in December hoping inflation would begin growing.  CPI’s rising trend along with other economic positives like retail sales and employment figures should provide adequate justification for the Fed to tighten monetary policy one last time this year.