CPI Unchanged in October on Higher Priced Services, Cheaper Gas

Overall consumer prices were flat in October after inching up in September as considerably lower energy prices offset modest price increases in food, shelter and a number of other index components.  The Consumer Price Index for All Urban Consumers (CPI-U) for October from the Bureau of Labor Statistics indicated that seasonally adjusted prices were unchanged after rising 0.1% in September and falling 0.2% in August, while they were 1.7% higher than a year earlier.  The unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, actually fell to 237.433 in October from 238.031 in September, while it still remained 1.66% higher than the 233.546 reading from October of last year.  As the drop in energy prices energy prices was the major drag on the index in October, core prices, which exclude food and energy, rose by 0.2%, as the unadjusted core index rose from 238.841 in September to 239.413 in October, while that index was 1.81% ahead of its year ago level of 235.162...

The seasonally adjusted energy price index fell by 1.9% in October after falling a total of 3.3% over the prior two months as prices for energy commodities were 3.0% lower while the index for energy services fell 0.2%.  Energy commodity prices decreased on a 3.0% drop in the price of gasoline, the largest component, and a 4.0% drop in fuel oil prices, while prices for other fuels, including propane, kerosene and firewood, averaged a 0.5% decrease.  Within energy services, the index for utility gas service fell by 2.7%, the fourth decrease in five months, while the electricity price index rose 0.5% after falling 0.7% in September.  Energy commodities are now priced 4.9% below their year ago levels, with gasoline down 5.0%, while the energy services price index is 3.2% higher than last October...

The seasonally adjusted food index rose by 0.1% in October, after rising 0.3% in September, and it is now 3.1% higher than October a year ago. Prices for food away from home rose by 0.2% as prices for meals at full service restaurants rose by 0.2% and prices at fast food restaurants were 0.3% higher, while prices for food at schools rose by 1.4%, and prices for food from vending machines and other food away from home fell by 0.1%.  Meanwhile, the price index for food at home just rose 0.1% as lower prices for meats partially offset higher prices for the other major food groups..  The index for cereals and bakery products was 0.3% higher than in September as a 1.5% increase in prices for breakfast cereals and 0.6% higher priced cakes and cupcakes more than offset a 1.3% drop in bread prices..  Dairy products prices were 0.5% higher in October as cheese prices rose 0.7% while milk prices fell 0.5%..  Prices for fruits and vegetables rose 0.9% as prices for tomatoes rose 4.6%, prices for citrus fruit rose 3.8%, prices for potatoes rose 3.4%, and prices for canned vegetables rose 1.8% while frozen fruit and vegetable prices fell 1.1%.  Prices for nonalcoholic beverages and beverage materials were also 0.6% higher in October than September as prices for frozen juices and drinks rose 2.6% and prices for fresh juices and non-carbonated drinks rose 1.1% while coffee prices fell 0.5%.  Meanwhile, prices for the meats, poultry, fish, and eggs group fell by 0.4% as poultry prices fell 1.2% on 1.8% lower chicken prices, seafood prices fell 0.8% on prices for fresh fish that were 1.9% lower, pork prices fell 0.7% on 2.5% cheaper bacon, while beef prices rose 0.3% on 1.0% higher ground beef.  Even with some lower beef prices this month, prices for the various cuts of beef remain between 15.6% and 20.7% higher than a year earlier, while pork chops were up 13.7% on the year and ham prices were 12.6% more than last October..  Lastly, prices for other foods at home also fell by 0.4% as prices for sugar and artificial sweeteners fell 2.2%, prices for soups fell 1.6%, prices for olives, pickles, and relishes and for salt and other seasonings and spices fell 1.5%, and prices for frozen and freeze dried prepared foods fell 1.2% while butter prices rose 5.1%. Over the year, butter prices have now risen 29.8%, which was the largest line item annual increase in the index...

Within the seasonally adjusted core components of the CPI, which rose by 0.2% in October, we find that the composite of all commodities less food and energy commodities was statistically unchanged, while the composite for all services less energy services rose by 0.3%..  The index for shelter, which is almost 32% of the CPI, rose by 0.2%, with rents rising 0.3% and homeowner's equivalent rent rising 0.2%, while prices for lodging away from home rose by 0.7%, water & sewer bills rose 0.8%, as did the cost of household operations, with lawn care services rising 1.6%.  Meanwhile, prices for household furnishings and supplies, the commodity component of housing, rose by 0.4%, with a 1.4% jump in prices for living room, kitchen and dining room furniture and an 0.8% increase in prices for decor items offsetting a 1.2% decrease in the price of floor coverings..  The price index for apparel fell 0.2% in October as a 4.0% decrease in prices for men's suits, coats, and outerwear, a 2.0% cut in the price of jewelry and 1.8% drop in prices for women's outerwear was offset by increases of 4.3% in the prices of women's dresses and 2.8% in the price of children's footwear.  The aggregate index for medical care, meanwhile, rose 0.2% in October as the medical care services index rose 0.2% on a 0.6% increase in services from medical professionals other than doctors and dentists and a 0.3% increase in outpatient hospital services, while the medical care commodity index was unchanged after rising 0.5% in September as a 2.1% decrease in non-prescription drug prices offset a 0.7% increase in prescription medicines.  Then, while the transportation composite index showed a 0.7% decrease, that index includes gasoline, which you'll recall fell in price by 3.0%; prices for transportation commodities less fuel prices, however, fell just 0.1%, as prices for new cars and trucks rose 0.2% and prices for oil & other automotive fluids rose 0.7% while prices for used cars & trucks fell 0.9% and parts and equipment prices averaged 0.1% less.  At the same time, the transportation services index rose 0.8% on 2.9% higher car and truck rentals, a 2.6% increase in train fares, and a 2.4% increase in airline fares.  Meanwhile, the recreation price index rose 0.2% as recreation commodities were unchanged as a 1.8% increase in prices for newspapers and magazines and a 0.7% increase in prices for pets and pet supplies was offset by a 1.2% drop in prices for televisions, a similar drop in prices for photographic equipment and supplies, and 1.0% lower prices for audio discs and other media, while prices for recreation services rose 0.4% on 2.0% higher rental of video discs and other media, 0.8% higher priced cable and satellite television and radio services and 0.6% higher admissions to sporting events.  Lastly, the aggregate education and communication price index fell 0.2% as education and communication commodities fell 0.1% as a 1.1% drop in prices for telephones and other consumer information hardware more than offset a 0.7% increase in prices for college textbooks, while the index for education and communication services fell 0.2% as a 1.9% decrease in charges for wireless phone services was partially offset by a 0.7% increase in college tuitions and fees and 0.5% higher postage. Other than the aforementioned increases in meat and butter prices, the only other line item among CPI components that showed an annual price change greater than 10% was televisions, which are now 14.1% cheaper than they were a year earlier... 

Our FRED graph below shows the overall change in each of the major component indexes of the CPI since January 2000, with all the indexes reset to 100 as of that month for an apples to apples comparison of the price changes in each since.  In blue, we show  the relative track of the price index for food and beverages; in bright green, we show the reset price index for all housing components, which includes rent, homeowners equivalent rent, utilities, insurance & household maintenance; in red, we have the price changes for apparel, the only index to show a net price decline over the previous decade; while the relative change in the price index for medical care shown in violet has obviously seen the greatest price increase over the period.  Next, the transportation price index is in orange, and shows the impact of volatile fuel prices on the cost of transportation, while the price change for education and communication over the period is tracked in brown, and in dark green is the relative strength of the index for recreation prices.  Finally, we’ve added the track of the overall CPI-U in black, which tends to track close to the large housing component, which makes up 41.5% of the total index. This graph can also be viewed in a larger interactive size, wherein you can track the monthly changes in all of these relative price indexes by dragging your cursor across the graph…  

(the above crossposted from my weekly summary at Marketwatch 666)