A benign CPI report with just 2.7% increase in annual inflation against expectations of 3.1% suggests that price increases are moderating.
The BLS finally got its act together after the government shutdown, presenting the November CPI. The CPI rose a modest 2.7% Y/Y a benign reading compared to the 3.1% consensus, and far slower than September's 3%. This was the first report after Sep as the BLS couldn't collect October data becayse of the 43 day government shutdown from Oct 1st.
The Core measure without food and energy, also increased just 2.6% Y/Y, V the +3.0% consensus estimate and +3.0% growth in September.
Due to the shutdown most readers will be uncertain of the reports quality and its myriad assumptions and gap-fills. Still the adjustments at least give us data to ponder.
Without October data, the BLS couldn't provide the month-over-month change in inflation, but at least provided a 0.2% on a seasonally adjusted 0.2% rise over September.
What was in the report?
Energy 4.2% higher Y/Y, with fuel oil increasing 11.3%, electricity +6.9% and natural gas 9.1% - these are high increases.
Food mercifully stalled at a gain of just 2.6% Y/Y, with the at-home food index increased even less at 1.9% Y/Y
The big surprise and positive from the index was shelter, advancing just 3% - a nod to the moribund housing industry struggling from poor demand, affordability and high mortgage rates.
Medical care was higher by 2.9%, and used cars and trucks jumped up 3.6%.
Services less energy services increased 3.0% Y/Y.
Where does this take us? Clearly one would need to see another report before one could accept lower inflation as this one suggests. Still for whatever its worth, shelter costs have been declining and it does have an overweight component in the index. Given the low wage inflation of 3.5% seen in the payroll report on Monday, I would take this report, as a plus for now.
The markets certainly did, rebounding to a 0.8% for the S&P 500 and 1.3% gain for the Nasdaq composite.
