U.S. inflation may buoy Fed

That acceleration followed several years of aggressive Fed easing (2001-2004), and it prompted a subsequent tightening, in which raised the Fed raised its target rate from 1% to 5.25%. Excluding mortgage interest costs, the gauge is at the lowest in 40 years. The core rate has moved by a trivial percentage and was 1.8% in August and 1.9% in September. “Indeed, the foreign exchange reserve data released on Saturday suggest that the People’s Bank was able to step back from its efforts to shore up the currency last month”, he writes. Economists were looking for a 0.2 percent rise in October and a 0.1 percent rise from a year ago.

The dollar index, which measures the greenback against six major peers, was up 0.17 percent at 99.613 in late trading. The BLS separates out all energy costs and puts them together into one index. Over the year, gasoline has fallen 27.8%. And prices continued to plunge on the forecourts last month, with fuel falling by 14 per cent on an annual basis. Graphed below is the overall CPI energy index.

The slight increase in consumer prices was in line with economists’ expectations. Over Jan-Oct the CPI grew by 3.7% year-on-year. Rent just keeps increasing and this month rent jumped by 0.3% and is up 3.7% for the year. The Consumer Price Index rose moderately in October and that was the case in nearly any way you sliced and diced the data.

Nationally, the inflation rate rose a seasonally adjusted 0.2 percent in October, and 0.2 percent over the past 12 months before seasonal adjustment. In October, it rose by 1.1%.

However, she added that Capital Economics does not expect United Kingdom inflation to reach the BoE’s target of 2 per cent until 2018, as the effect of lower energy prices will take time to feed through, while a strong pound will hold down import prices and rising productivity will hamper wage growth. At 107.2 percent of its 2012 average, total industrial production in October was 0.3 percent above its year-earlier level. The cost of housing and medical care – two of the biggest expenses for most families – climbed again and are running above a 3% annual rate.

Below is a graph of the medical commodities index, which is mostly prescription drug prices.

The October index for bread was 179.2, down 0.2% from September but up 2% from October 2014.

Real hourly earnings increased by 0.2% for all employees. At first sight, nothing to write home about it, but that first impression changes dramatically when we dig deeper into the numbers in the context of inflation generation.