The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in October on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, inflation increased 1.7%.
This was slightly ‘higher’ than the expected number of -0.1%. October continued a string of months with sharply falling energy prices: Gasoline was down 3.0% in the month and fuel oil was down 4.0%. Also falling were prices for used cars and trucks (-0.9%) and apparel (-0.2%). These declines were balanced off by rises in the cost of shelter (0.2%), electricity (0.5%) and transportation services (0.8%). The food index rose 0.1% in October, its smallest increase since June.
Holders of I Bonds and TIPS are also interested in non-seasonally adjusted inflation, which is used to adjust the principal balance of TIPS and set future interest rates for I Bonds. In October, the CPI-U index number fell to 237.433, a drop of 0.25% from September’s 238.031. I have updated my Tracking Inflation and I Bonds page to reflect these new numbers.
Core inflation, which strips out food and energy, rose 0.2% in October and is up 1.8% over the last 12 months.
Here is the trend in CPI-U (also called ‘headline inflation’) over the last 12 months. Note that inflation has been essentially flat over the last four months:
While inflation remains very mild, October’s slightly higher-than-expected numbers could influence today’s reopening of a 10-year TIPS at auction. If investors see this as an uptick in inflation, it could cause higher demand. I’ll be checking in on this auction after the markets open and then again when it closes at 1 p.m.