Consumer Prices in U.S. Picking Up Excluding Food, Energy

The consumer price index increased 0.2% in October after a 0.2% decline the previous month, the Labor Department said Tuesday.

The year-over-year growth in October or the so-called core consumer prices, which includes everything excluding energy and food was hovering at 1.9% that is close to the 2% deemed safe by the Fed itself. The energy index, which declined in August and September, advanced 0.3 percent in October; major energy component indexes were mixed.

The food index has increased 1.6 percent over the past year, and the index for all items less food and energy has risen 1.9 percent. In October, the index for manufacturing moved up 0.4 percent, while the index for mining fell 1.5 percent and the index for utilities dropped 2.5 percent.

WASHINGTON (AP) – The costs of food, gasoline, shelter and medical care rose last month, yet inflation continues to run at low levels ahead of a Federal Reserve meeting next month to consider raising short-term interest rates for the first time in almost a decade.

Medical care services absolutely soared up 0.8% for the month and have increased 3.0% for the year. Food costs increased 0.1 percent, the smallest advance since May. The Consumer Price Index rose moderately in October and that was the case in nearly any way you sliced and diced the data. Over Jan-Oct the CPI grew by 3.7% year-on-year.

The modest increase in prices was in line with expectations and suggests that the drag on inflation from a strong dollar and lower oil prices was starting to ease. The central bank’s preferred price-growth gauge is the Commerce Department’s personal consumption expenditures measure, which hasn’t met the Fed’s 2 percent goal since April 2012. Yet even core inflation has hovered below the Fed’s goal.

– Real average hourly earnings rose a seasonally adjusted 0.2% in October, and are up 2.4% from October 2014.

That said, it was certainly interesting to see how quickly the White House reacted to a Republican-backed bill to make the Federal Reserve set interest rate policy using a mathematical rule issuing the following statement: “If the president were presented with (the legislation), his senior advisers would recommend that he veto the bill”. “We expect core goods prices to remain a drag, driven by the renewed decline in commodity prices and the recent surge in the value of the dollar, but their impact on overall CPI is likely to be transitory”, states Barclays. Core prices had been expected to inch up by 0.1 percent.

The greenback was supported in early session by an increase in the U.S. inflation.

While Americans are pocketing much of the savings at the gas pump, steady hiring has the potential to spur spending as well bigger wage gains.