Consumer Price Index Up 0.1% as Rent, Food Costs Rise, Gas Prices Fall

Consumer price index rental prices riseBy CHRISTOPHER S. RUGABER

Rising food costs and higher rents offset a drop in gas prices last month, leaving consumer inflation all but flat in October.

The consumer price index rose a seasonally adjusted 0.1 percent in October, the Labor Department said Thursday. That's down from sharp gains of 0.6 percent in the previous two months, which were driven by a spike in gas prices that has since receded.

Gas prices fell 0.6 percent last month. Food prices rose 0.2 percent, pushed higher by steep increases in milk and cheese costs.

Excluding volatile food and gas, prices increased 0.2 percent last month.

The cost of shelter, which includes rents, rose 0.3 percent, the most in more than four years. Rental vacancies have declined in recent months, pushing rents higher. Hotel costs also increased last month.

Clothes and airline fares also rose last month. The price of new and used cars fell.

Over the past 12 months, overall consumer prices have increased just 2.2 percent. That's only slightly above the Federal Reserve's inflation target of 2 percent.

"Inflationary pressures at the consumer level are modest," Steven Wood, an economist at Insight Economics, said in a note to clients.

Mild inflation leaves consumers with more money to spend, which can boost economic growth. Lower inflation also makes it easier for the Fed to continue with its efforts to rekindle the economy. If the Fed were worried that prices are rising too fast, it might have to raise interest rates.

Minutes of the Fed's October meeting released Wednesday suggested policymakers could launch a new bond-buying program in December to spur job growth. The goal of the purchases would be to lower long-term interest rates to encourage more borrowing and spending.

Gas prices rose sharply over the summer and into September, but have since come down. The average price for a gallon of gas nationwide was $3.44 on Wednesday, about 35 cents below last month's level.

The price of milk increased 0.9 percent last month, the most in more than a year. Cheese costs jumped 1 percent. Prices for bread, cereals, meat and chicken also increased.

The increases suggest that this summer's drought is starting to drive up prices at supermarkets and grocery stores. The drought damaged corn, soybeans and other crops. Corn and soybeans are used in animal feed, which pushes up the price of beef, chicken and pork.

Corn is also used in many products found throughout the supermarket, from cereals to soft drinks to cosmetics.

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Gas is up where I live.

November 16 2012 at 5:54 PM Report abuse +1 rate up rate down Reply

let me just add that I think the adjustment above for food inflation is extremely low. the main grocery store in my town raises prices two or three times a year. a bakery made loaf of bread here is 3.50 to $5.00 per loaf with the more desirable one being the 5.00 loaf. a 2lb tub of cottage cheese used to be 1.99 and now a 1.5 lb tub of the same cottage cheese is 3.79. boxes and cans of everything have been downsized. I bought a bag of pepperidge farm cookies recently and although the package exterior had not changed the cookies were sliding around in their little trays because one large cookie was missing from each tray, the bag used to contain ten cookies now it is 8, a 20% reduction in size and they raised the price .50 per bag too!! WELL THIS SHOULD BE BETTER FOR THOSE DIETING.

November 16 2012 at 6:12 AM Report abuse rate up rate down Reply

years ago the CPI or consumer price index INCLUDED food and heating costs in it's calculations. from what I recall someone would buy a specific basket full of groceries and several months later buy the exact groceries and compare the change in prices. Then somewhere along the line food and fuel prices were deemed to be too volatile and removed or reduced somehow in the equation. Unfortunately everything that is important to my household, regular groceries, propane fuel for heat and gas for my car, restaurant meals, health club membership, internet access, these are the things I mostly am buying and they have all gone UP SIGNIFICANTLY. I throw all of my receipts in a large envelope over the year and I compare them from year to year, it seems like I buy mostly the same things and am a creature of habit and my rate of inflation for what actually runs my household is closer to 6 percent not zero or one percent. Sadly tying social security and other pension benefits to the CPI as made it a useless statistic.

November 16 2012 at 6:03 AM Report abuse rate up rate down Reply

Great time to buy a house , builders offering great incentives , paying your closing costs ,interest rates very low and prices are great !!

November 16 2012 at 12:32 AM Report abuse rate up rate down Reply

I'd like to know where those gas prices are falling. On Monday I took my husband to the airport. In the 25 minutes it took me to get back home and past the local Hess station, premium had gone from $4.19 to $4.29 a gallon.

November 16 2012 at 12:13 AM Report abuse rate up rate down Reply
1 reply to jt2's comment

$3.15 a gal here and falling

November 16 2012 at 12:27 AM Report abuse rate up rate down Reply

hey dano your comment was really stupid...please tell me why the rich would like to get rid of the middle class?
the middle class is what drives the economy and without them there is no economy !!!

November 15 2012 at 11:33 PM Report abuse rate up rate down Reply

You can only blame the poor economy on those who created it. The GOP in the Bush era. The rich plan on two classes of Americans. The rich and the poor with no middle class. Then they can get the cheap labor they dream of.

November 15 2012 at 11:24 PM Report abuse rate up rate down Reply
1 reply to Dano's comment

oh god...still Bush's fault?

November 16 2012 at 2:06 AM Report abuse rate up rate down Reply

you should not be writing articles on the economy

November 15 2012 at 11:11 PM Report abuse rate up rate down Reply

gas was 3.22 for about a week now saw today its 3.29 a gallon

November 15 2012 at 10:46 PM Report abuse rate up rate down Reply

Nice. "Excluding volatile food and gas." Not only does the core CPI exclude two of the biggest items in people's budgets, but inflation, as measured today, reflects an adjustment to increases in price by lowering one's standard of living. As John Williams of points out, if the methodology for measuring inflation employed the standards used just 30 years ago - which reflected changes in the cost of a constant standard of living - the current rate of inflation would be running at about 9%.

This kind of hack reporting from the drones in the MSM is just more lies and misinformation designed to pacify the credulous and the ignorant. After all, what does it make more sense to believe, a dubious statistic put out by an untrustworthy government, or your own eyes?

November 15 2012 at 9:53 PM Report abuse +1 rate up rate down Reply