CPI Data as Expected- Jobless Claims Rise

The market consensus was spot on for October's CPI data. Everything came in at consensus. Headline CPI rose +.3% MoM and 3.5% YoY. Core CPI rose +.2% MoM and 2.2% YoY. This was the fifth month in a row that core CPI rose +.2% MoM indicating that core inflation, excluding food and energy, has been growing at a very steady pace. The 3.5% annual increase in headline inflation was the largest increase in over a year, and is a substantial jump from the 2.8% YoY rate of September. The increase to 2.2% YoY in core inflation represents the first increase in this measure this year. It has trended down from 2.7% YoY in January.

Energy costs began their serious rise in price in the second half of October, and were therefore not included in the month's inflation data which are collected mid-month. The steady rise since then indicates that inflation will definitely rise in November. This will be a concern for the Fed. For October, retail energy prices (as well as gasoline prices) rose +1.4% MoM (+14.5% YoY), the largest monthly gain since May. Electricity prices rose +1.5% MoM, the largest increase since January. Over the past year, gasoline prices through mid-October had risen 23.4%.

Food prices rose +.3% MoM, and are up 4.4% YoY. Medicare moved higher again, rising +.6% MoM, the fastest pace in the past six months.

Housing costs slowed to +.2% MoM and +3.1% YoY. Owner's equivalent rent rose +.2% MoM (+2.8 YoY).

In another report, new jobless claims rose 20k, much more than expected, to 339k (consensus 320k), just matching the six month high reached in October. This will also concern the Fed as it suggests that the job market may be slowing. Continuing claims have moved toward the high end of the past year suggesting that it is getting harder to find a new job when laid off.