U.S. consumer prices up 0.2% in November

The Office for National Statistics (ONS) reports that the United Kingdom consumer prices index (CPI) – which measures inflation – grew by 0.1 per cent in the year to November, meeting analysts’ forecasts. But clothing prices were the biggest drag on inflation after they recorded an unprecedented monthly fall between October and November, usually a period of higher prices as consumers shop before Christmas. Inflation in the wholesale price index (WPI), updated quarterly, fell from 3.4 per cent y/y in June (its last update) to 2.6 per cent in September, as a slowdown in inflation in manufacturing was offset by inflationary gains in agriculture, livestock & fishing, and mining & quarrying. That was the largest 12-month increase since May 2014 and in line with the Fed’s annual 2 percent target.

Gasoline prices plunged by 2.4 percent, while prices for natural gas and fuel oil slumped by 1.9 percent and 1.3 percent, respectively. The Headline Index in particular increased by 0.7%, 0.3% points higher from 0.4% in October.

The food away from home index climbed 0.2 percent to finish at 258.8 in November.

The 12-month gain in core inflation, while modest, is still the fastest in more than a year, since a similar 2 percent rise for the 12 months ending in May 2014.

Medical care costs increased 0.4 percent.

The Fed, which has a long-range inflation target of 2%, monitors a broad range of price gauges, including an index based on personal consumption.

Last month, the figure was in deflationary territory at -0.1%.

“Food prices as observed by the food sub-index increased to the highest rate recorded this year”.

“The expected reversal in prices of some perishables and pulses, the likely softness in global crude oil prices and the waning of the adverse base effect would contribute to keeping retail inflation largely steady at current levels during the remainder of FY 2015-16”, said Ms Nayar. The headline rate edged up from 0.2% in October to 0.5% y/y, the highest since December.

After easing monetary policy aggressively this year, the RBI kept the key repo rate on hold at 6.75 percent earlier this month.

Still, the Fed is expected to raise its benchmark overnight interest rate from near zero at the end of the meeting on Wednesday, encouraged by a strengthening labour market. With rural wages already depressed and the agrarian economy slumping, a rise in prices can spell more trouble for the farm economy.