According to our analysis USDJPY and EURUSD moved 54 pips on US BLS Consumer Price Index (CPI) data on 13 November 2024.
USDJPY (32 pips)
EURUSD (22 pips)
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October 2024 CPI Report: Key Highlights and Insights
Today’s Consumer Price Index (CPI) report from the Bureau of Labor Statistics reveals modest inflationary trends in October, showing a steady pace in prices with an overall increase of 0.2% for the month, consistent with the previous three months. This brings the year-over-year increase for all items to 2.6%, marking a slight acceleration from the 2.4% reported for September. Here’s a breakdown of the key drivers behind October’s CPI numbers and what it could mean for consumers and the economy.
Shelter Costs Remain a Key Driver of Inflation
Shelter costs, a substantial portion of the CPI, rose 0.4% in October. This increase accounted for more than half of the overall rise in the CPI for the month. Over the past 12 months, shelter costs have climbed by 4.9%, contributing significantly to the core inflation measure (all items less food and energy), which rose 3.3% year-over-year. Rent and owners’ equivalent rent both increased by 0.4% in October, reflecting the persistent upward pressure in housing costs.
Food Prices Continue to Climb, but at a Slower Pace
The food index increased by 0.2% in October, a slight slowdown from September’s 0.4% rise. Prices for food at home edged up 0.1%, with notable increases in cereals and bakery products (+1.0%) and dairy (+1.0%), as well as fruits and vegetables (+0.4%). However, the meats, poultry, fish, and eggs index fell 1.2%, driven by a sharp 6.4% decrease in egg prices. For food away from home, including restaurant meals, prices rose 0.2%. Over the past year, food prices have risen by 2.1%.
Energy Index Stays Flat After Recent Declines
Following a 1.9% decline in September, the energy index remained unchanged in October, bringing some stability after several months of fluctuation. Gasoline prices continued their decline with a 0.9% drop, contributing to the 12.2% decrease over the past year. Fuel oil also saw a notable reduction, with prices down by 20.8% over the last 12 months. However, the cost of electricity increased 1.2% for the month and has risen by 4.5% over the year, while natural gas increased by 0.3% in October, up 2.0% year-over-year.
Core CPI Sees Steady Growth, Driven by Services and Transportation
The core CPI, excluding the volatile food and energy sectors, rose by 0.3% in October. Services excluding energy increased 0.3% as well, with significant contributions from shelter and medical care. Used cars and trucks experienced a surprising uptick of 2.7% for the month, after several months of declines. Airline fares also jumped by 3.2%, and medical care services increased by 0.4%.
Apparel, Communication, and Household Furnishings Decline
While the prices of many items rose, some categories saw decreases. Apparel fell by 1.5% in October, following an increase in September, while communication and household furnishings indexes also experienced declines. These decreases helped to offset some of the monthly CPI gains, indicating some price variability across goods and services.
Annual Inflation and Outlook
The CPI report shows a steady 2.6% increase over the past 12 months, reflecting a measured but persistent inflationary environment. The energy index, which has been a source of relief with a 4.9% decrease over the year, helped balance the rise in shelter and other core costs. However, the uptick in core inflation, particularly from services and shelter, suggests ongoing challenges in keeping inflation within target levels.
Looking forward, the November CPI report, scheduled for December 11, will offer further insights into these trends. Key areas to watch will include the energy index, as seasonal adjustments for heating costs take effect, and shelter, which remains a major factor in inflation. The CPI data continues to be an essential gauge for understanding the economic pressures on consumers and will likely influence the Federal Reserve's monetary policy decisions in the coming months.
In Summary
October’s CPI data suggests a stable but gradually rising inflation environment, with shelter costs as the dominant force. Food prices continue to rise moderately, while energy costs remain volatile but stable for now. As inflation remains slightly above the Federal Reserve’s target, policymakers and consumers alike will be keeping a close eye on these trends heading into the winter months.
Stay tuned for our next update following the release of November’s CPI data, as we continue to track the evolving inflation landscape and its implications for everyday life and economic policy.
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