December 2017 CPI: Year-Over-Year Inflation Rate Now 2.1%

According to the BLS, the Consumer Price Index (CPI-U) year-over-year inflation rate was 2.1 % – moderating slightly. The year-over-year core inflation (excludes energy and food) rate rose marginally to 1.8 % from last month’s 1.7 %, and is below the target set by the Federal Reserve.

Analyst Opinion of the Consumer Price Index

Energy price changes were mixed this month. Core inflation remain below 2.0 % year-over-year but increased 0.1 %

The market expected (from Bloomberg / Econoday):

  Consensus Range Consensus Actual CPI-U – month-over-month (MoM) 0.0 % to 0.3 % +0.1 % +0.1 % CPI-U year-over-year (YoY) 2.0 % to 2.3 % +2.1 % +2.1 % CPI less food & energy (MoM) 0.1 % to 0.3 % +0.2 % +0.3 % CPI less food & energy (YoY) 1.6 % to 1.8 % +1.7 % +1.8 %

z cpi1.png

As a generalization – inflation accelerates as the economy heats up, while inflation rate falling could be an indicator that the economy is cooling. However, inflation does not correlate well to the economy – and cannot be used as a economic indicator.

The major influence on the CPI was again energy prices.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in December on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.1 percent before seasonal adjustment. An increase of 0.4 percent in the shelter index accounted for almost 80 percent of the 1-month all items increase. The food index rose in December, with the indexes for food at home and food away from home both increasing. The energy index, which rose sharply in November, declined in December as the gasoline index decreased. The index for all items less food and energy increased 0.3 percent in December, its largest increase since January 2017. Along with the shelter index, the indexes for medical care, used cars and trucks, new vehicles, and motor vehicle insurance were among those that increased in December. The indexes for apparel, airline fares, and tobacco all declined over the month. The all items index rose 2.1 percent for the 12 months ending December, compared to 2.2 percent for the 12 months ending November. The index for all items less food and energy increased 1.8 percent over the last year; the 12-month change has now been either 1.7 or 1.8 percent for eight consecutive months. The food index rose 1.6 percent over the past year; the index for energy increased 6.9 percent, with all of its major component indexes rising during 2017.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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