The September Consumer Price Index (CPI) was flat month-over-month and up 1.7% compared to a year-ago. The CPI excluding food and energy was up 0.1% in September from August and up 2.4% year-over-year. Prices for food and beverages were up 0.1% for the month. Energy costs were down 1.4%, mainly on a drop in gasoline prices of 2.4%. Overall, price increases remain tepid.
Shelter costs – which make up about a third of the CPI basket – were up 0.3% month-over-month and up 3.5% year-over-year. Costs for housing remain a consistent source of upward pressure for prices. Excluding shelter only, the CPI was down 0.1% and up only 0.8% from September 2018.
Commodities costs continued to exert little or no pressure on prices and were down 0.4% in September from the prior month and unchanged compared to a year-ago. On the other hand, services are increasing at a steady pace and were up 0.2% in September from August and 2.8% higher than a year-ago. Prices associated with healthcare are still rising faster than most others. Medical care services were up 0.4% in September (weight 7.046) in part on a sharp rise for health insurance of up 1.4%. Health insurance was up 18.8% compared to a year ago.
This is the last major inflation report the FOMC will have in hand when they meet on October 29-30. The Committee’s preferred measure of the PCE deflator will not be available until 8:30 ET on Thursday, October 31. If worries about too low inflation are a major reason for further rate cuts, the CPI should give policymakers enough room to make that choice in combination with hints of a cooling in the labor market.
Disclaimer: Whetstone Analysis provides commentary as a service to its subscribers. Whetstone Analysis is not responsible for, and expressly disclaims all liability for, damages of any kind arising out of use, reference to, or reliance on any information contained within the site. While the information contained within the site is periodically updated and every effort is made to ensure its accuracy, no guarantee is given that the information provided in this Web site is correct, complete, and up-to-date. Click here to read our full Disclaimer.