CPI Jumps 0.4% on Shelter and Gas Costs

The October Consumer Price Index increased by a high 0.4%.  This is a six month high.  The usual suspects were shelter, which soared up 0.4% for the month and gasoline, which rose 7.0% for the month.  Food inflation had no change for the second month in a row.  Inflation with food and energy price changes removed increased 0.1% as shelter and medical costs are part of this measure.  From a year ago overall CPI has now risen 1.6%, the highest annual increase in two years.  Without energy and food considered, prices have increased 2.1% for the year.   CPI measures inflation, or price increases.



Yearly overall inflation is shown in the below graph and we can see the 1.6% increase.


CPI year ago change


Core inflation, or CPI with all food and energy items removed from the index, has increased 2.1% for the last year.  For the past decade the annualized inflation rate has been 1.9%.  Core inflation is the figure the Federal Reserve considers for interest rate increase decisions and this month's statistics support an increase.



Core CPI's monthly percentage change is graphed below.  This month core inflation increased 0.1%, the 2nd in a row.  Within core inflation, shelter increased 0.4%, with monthly rental costs increasing 0.4% and home ownership equivalent rent increased 0.3%.  Shelter overall is up 3.5% for the year with rent increasing 3.8% annually.  Car insurance increased 0.2% and has been rising, now 6.7% for the year.  Apparel increased by 0.3% and is now up 0.7% for the year.  Airfare plunged by -2.2% and is down by -5.2% for the year.


core cpi


The energy index has inverted and is now up 0.1% from a year ago.   The BLS separates out all energy costs and puts them together into one index.  For the year, gasoline has declined -0.9%,as has fuel oil.  Graphed below is the overall CPI energy index.


CPI energy index


Graphed below is the CPI gasoline index annual percentage change and for the month gasoline prices increased 7.0%.


CPI Gasoline


Graphed below is the rent price index which has been soaring for some time, now up 3.8% annually, and is shown in the below graph.


cpi rent


Food prices had no change for the month.  Food and beverages have now decreased by -0.4% from a year ago.  Groceries, (called food at home by the BLS), declined another -0.2% for the month, and are down -2.3% for the year.  Rice fell by -2.4%. for the month. Meats dropped by another -0.7% and are down -6.4% for the year.  Dairy increased 0.3% for the month but has declined -1.7% annually.  It's no surprise to see food prices drop as the impact of the drought of 2015 has dissipated.   Eating out, or food away from home increased 0.1% for the month and is up 2.4% for the year.


CPI food index change


Graphed below are grocery prices, also referred to as the food at home index.


food at home


Medical costs are part of core inflation and are a never ending source of price increases.  The Medical care index had no change, a rarity.  Prescription drugs increased 0.2% while hospital services prices increased 0.1% and physicians services decreased -0.1%.  Graphed below is the overall medical care index, which is up 4.3% from a year ago.


CPI Medical index


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


CPI Medical commodities


Real hourly earnings increased by 0.1% for all employees.  Real means wages adjusted for inflation.  CPI increased 0.4% while wages increased by 0..4%.  For the year real hourly earnings have increased 1.2%, not a lot.  The average real hourly wage is now $10.72 and the average wage, not adjusted for inflation is $25.92  Weekly real earnings did not change as hours did not change.  Real weekly earnings now stand at $389.66.  The work week is 34.4 hours.  There is a separate category for production and nonsupervisory employees and their real hourly earnings decreased by -0.2% to $9.21 and their real weekly earnings also decreased -0.2% to $309.31.  That's not a good sign as these people are the worker bees, the regular folk.

CPI details

The DOL/BLS does take yearly surveys on where the money goes in the monthly budget, but as one can see, food and energy are significant amounts of the monthly finances.  Run away costs in these two areas can break the bank, so can food.  Additionally CPI uses substitution, so if flour goes through the roof, somehow we're all just fine with oats and prices didn't really overall increase much. Here is the BLS CPI site, where one can find much more details, information on calculation methods and error margins.

Other CPI report overviews, unrevised, although most graphs are updated, are here.   If you're wondering why the graphs display different figures from the text, the graphs calculate percentages from the index and do not round.  The actual data from the BLS report does round to one decimal place. In other words, 0.05% is rounded to 0.1%.

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