Consumer prices held steady in November

The Consumer Price Index for food eased 0.1 percent in November, finishing at 248.3, down from 249.1 reported in October, according to the Bureau of Labor Statistics of the Dept. of Labor.

Meanwhile, prices in the alcoholic beverages category fell by less in November than in the same month of past year.

“However, it will not be until towards the end of 2017 that inflation reaches [the Government’s] 2% target”, she said.

“The upbeat CPI report is leading Treasuries given that inflation is one of the key variable that will drive the evolution of the tightening cycle”, said Matthias Rusinski, US rates strategist at UBS in NY. The cost of electricity, however, increased 0.3 percent.

“Judging by the latest data, the Bank of England’s Monetary Policy Committee still has some wiggle room before inflationary pressures ruffle its dovish feathers”. Shelter prices have risen 3.2 per cent over the year and the cost of services excluding energy services is up 2.9 per cent. The Labor Department found Americans’ inflation-adjusted weekly wages fell 0.2 per cent in November, as hourly earnings rose but the number of hours worked declined.

A strong dollar, as well as an inventory glut is keeping price increases for some core goods in check.

The unchanged consumer price index was in line with economists’ estimates.

Consumer food price inflation, which has a weightage of about 47 per cent in the retail inflation index, spiked to 6.07 per cent in November from a level of 1.13 per cent in November 2014.

When the MPC comes to meet again in January it will likely have to take into account continued falling oil prices, with Brent Crude at 37.35 U.S. dollars a barrel on Tuesday against the price in July 2014 of above 110 U.S. dollars a barrel, and a rate-rise from the U.S. Federal Reserve. It was the third straight month that the core CPI increased by that margin, and reflected rising rents, airline fares, new motor vehicles and healthcare costs. The PCE had risen a scant 0.2% through the 12 months ended in October.

USA headline inflation for November was remained steady in a month on month comparison and increased by 0.5% year on year.

Transport, alcohol and tobacco costs all fell between October and November 2015, but by less than in the previous year to push the basket price – or inflation – up.

Fed officials have been hesitant to raise the central bank’s benchmark rate for the first time in almost a decade while inflation remains short of its annual 2% target.

Policymakers usually aim to achieve low and stable inflation and fear the effects of falls in prices, because they tend to benefit lenders and hurt debtors-which can be rushed to deleverage further, putting the brakes on economic activity.