The BLS reported the CPI Rose 0.3% for the month, most of which stems from energy and owners equivalent rent.
The BLS also noted the indexes for prescription drugs were incorrect as published for May 2016 through August 2016. This affected the U.S. All Items Index back through May. Corrections have been loaded to the databases.
The 0.3% rise for the month, matched the Econoday Consensus.
Highlights
Progress is being made at the headline level but less so on the core. Consumer prices rose a noticeable and as-expected 0.3 percent in September with energy surging 2.9 percent on the month and owners’ equivalent rent up 0.4 percent, two important areas of strength. The year-on-year rate for the CPI is up 4 tenths to plus 1.5 percent which is the highest since October 2014.
However, when excluding energy and also food, which was flat in the month, the price increase slows to only 0.1 percent which is below Econoday’s low forecast. The core’s year-on-year rate is down 1 tenth to 2.2 percent. This latter rate runs about 1/2 percentage point above the Fed’s target rate, the PCE core, but it’s the direction that counts and the dip does not point to a September increase for the Fed’s gauge.
Weak areas in September include apparel, down 0.7 percent on the month, and communications, down 0.8 percent. New vehicle prices are down 0.1 percent with used vehicles down 0.3 percent.
The Bureau of Labor Statistics has revised the all-items index back to May last year for corrections in the prescription drug index. The year-to-date gain for the all-items index is 1.7 percent vs plus 0.6 percent at this time last year. In another note in this report and a reminder of how soft inflation has been, the government has set the 2017 Social Security cost of living adjustment at plus 0.3 percent.
Inflation may be improving but the risk that accommodative monetary policy will overshoot the Fed’s 2 percent target is not front and center, especially at a November FOMC that will immediately precede the presidential election. The December FOMC, however, is another story but there’s still plenty of data to go.
CPI-U “Progress”
The above chart and following comments from the BLS.
Food
The food index was unchanged in September, as it was in July and August. The index for food away from home increased 0.2 percent, but the food at home index declined for the fifth consecutive month, falling 0.1 percent. Major grocery store food group indexes were mixed, with three declines and three increases. The index for nonalcoholic beverages fell 0.4 percent in September, its fourth decline in the last 5 months. The fruits and vegetables index, which was unchanged in August, fell 0.3 percent in
September. The index for meats, poultry, fish, and eggs continued to fall, declining 0.2 percent, with the beef index falling 0.5 percent.Energy
The energy index rose in September, increasing 2.9 percent after being unchanged in August. All major energy component indexes increased. The gasoline index, which fell 0.9 percent in August, rose 5.8 percent in September. (Before seasonal adjustment, gasoline prices increased 2.3 percent in September.) The fuel oil index also increased in September, rising 2.4 percent. The electricity index increased 0.7 percent in September, its third straight increase and largest since December 2014. The index for natural gas also continued to rise, increasing 0.8 percent in September following larger increases in July and August.
The energy index has declined 2.9 percent over the past year; this is the smallest 12-month decline since the period ending October 2014. The gasoline index has declined 6.5 percent over the last year, and the index for fuel oil has decreased 8.5 percent. However, the index for natural gas has risen 2.9 percent over the past year, and the electricity index has advanced slightly, increasing 0.1 percent.
All items less food and energy
The index for all items less food and energy increased 0.1 percent in September after rising 0.3 percent in August. The shelter index increased 0.4 percent in September, reflecting a 0.3-percent increase in the rent index and a 0.4-percent advance in the index for owners’ equivalent rent. The index for medical care rose, though the 0.2 percent increase in September was the smallest increase since March. The index for
prescription drugs increased 0.8 percent, while the hospital services index was unchanged. The index for motor vehicle insurance continued to rise, increasing 0.4 percent in September. The personal care index increased in September, advancing 0.4 percent. The index for airline fares rose 0.4 percent, following declines in July and August. The index for tobacco also increased 0.4 percent, while the alcoholic
beverages index rose 0.3 percent and the education index advanced 0.2 percent.
In contrast to these increases, several indexes declined in September. The index for communication fell 0.8 percent, its largest decline since October 2014, and the apparel index decreased 0.7 percent. The index for used cars and trucks continued to fall, declining 0.3 percent in September. The indexes for new vehicles and for recreation both fell 0.1 percent, while the index for household furnishings and
operations was unchanged.
Economic Parrots vs. Thinking Humans
The average economic parrot does not think. It simply squawks a programmed line that rising prices are a good thing.
In contrast to parrots, the average person on the street does not believe rising gas prices are a good thing. Moreover, the average renter does not believe rising rent is a good thing. Finally, the average person is happy when food prices drop.
By the time someone is in 4th or 5th grade, if not before, they like to get more for their money.
Mike “Mish” Shedlock
And every day’s a great day to buy a home. LOL!
That’s the policy! Maximizing the number of saps beholden to the banksters for the rest of their life. To the tune of 10x the their shoddily slapped together shack’s building cost. The saps thus afflicted are more pliant that way, as they can more reliably be counted on to stomp their boots to the beat set by Massa. All Massa has to tel them, is “your poppeti vaijue” “goes up” if we print money and hand to banksters. And “your poppeti vaijue” “goes up” if you cheer on us to ban anyone else from building themselves a half decent dwelling for a rational cost, since then noone would want the POS shack you were suckered into overpaying for…
Most Americans are so ill informed as to not to be able to qualify for citizenship except for that accident of birth.
I consider myself well read, but your blog has opened my eyes to the underlying trends beneath the numbers.
Our media is failing us badly in their superficial analysis, but they are getting their comeuppance – as an example, witness the decline in the value of the NYT
Yippee! The ball of civilization continues to roll downhill.
Looked like it was going to stop for a moment.
All roads lead to Mogadishu.
Good drivers are capable of driving faster, than their less competent inferiors….
“Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?”
~ G. Carlin
Yes, except that the idiots are entirely theoretical. I wonder why that is?
When CPI comes out the BLS also calculates real earnings.
Will POTUS take a victory lap here, too?
Year over Year real weekly earnings all non farm private employees.
July … +1.2%
August … +0.4%
September … +0.8%
And the real weekly earnings (YoY) for September 2015?
+2.4%
http://www.bls.gov/news.release/realer.t01.htm#re_table1.f.1
Wow, warm fuzzy happy stats by BLS just before an election. What a surprise!
It’s to soften the ObamaCare premium increases.
More Econoday silliness.
Redbook comparable store sales weekly index:
“Same-store sales were up a full 1.0 percent year-on-year in the October 15 week, doubling the prior week’s gain and resuming the sharp acceleration seen at the start of the month”
“sharp acceleration”? …. A few years ago Econoday would – ROUTINELY – note that 3% to 4% year over year represented a healthy retail enviroment. Haven’t read that in a long time. The chart within the link says it all.
http://mam.econoday.com/byshoweventfull.asp?fid=471712&cust=mam&year=2016&lid=0&prev=/byweek.asp#top
Oh, one other thing. The comparable sales are in nominal dollars. Factor in CPI and number is negative.
“It takes years of economic brainwashing to turn ordinary people into parrots who believe it’s a good thing to get less for your money.”
That’s right, it is not easy to understand such things, that’s why they have to go to Harvard or Princeton and learn from Professor Krugman.
“with the beef index falling 0.5 percent.” Yummy! Where’s the beef?
In Canada and some parts of US, housing inflation is off the charts. Yet, the official inflation bean counters are scrambling to find inflation.
Now, let me say that if you buy a house at current prices, that is going to dwarf all the other expenses in your lifetime. You can probably fill three mac mansion with stuff and still be house price positive.
That’s why the official inflation the biggest bullshit of our time.
Deflation is good for the majority, and real GDP in the long run.
Inflation is a bank loan bailout. Guess which one bankers choose.
Bloomberg and Econoday — two reasons not to subscribe to “professional” media opinions.
CNBC will tell me rubbish and lies for free
Cut….and….pasted.
It is good for the Democratic party to have more people become poorer, as the lower income demographic heavily favors the Democratic party in its voting patterns, more so than any other economic demographic. Middle class voters are much more inclined to go for someone like Trump, so fewer members of the middle class is a very favorable trend for Democratic party politics. What more do you need to know?
The Party wants what is best for the Party. Pure party politics. To look at it in any other way is to be perplexed, as it is incomprehensible in pure economic terms. More poor people and fewer middle class people = job security for Democratic party operatives. Chuck Schumer and his Comrades know who butters their bread. A country with a stronger middle class would favor the other party. So, Bloomberg is preaching what is best for the Democratic party, and in that regard is just a propaganda organ when it calls for higher prices (i.e. more poorer citizens who will pull the right Party lever). It is really simple, not economic rocket science.
Rents are really skyrocketing in the Pacific Northwest (OR and WA). Really quite a stunning rise in the past 5 years. In a lot of cases rents going up 8-10%+ a year for many years in a row.
A lot of cases people have seen their rent rise 50%-70%+ in the last few years in the Seattle metro and Portland metro. I wonder where the ceiling is to this? When will it end? Rent inflation in many parts of the U.S. are though the roof.