The Consumer Price Index increased 0.2 percent in October.
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Consumer price inflation in the United States increased in line with market expectations for October, whilst prices excluding food and energy costs edged up modestly. In the 12 months to the end of October, the CPI advanced 0.2 per cent. Economists polled by Reuters had forecast the CPI rising 0.2 per cent last month and edging up 0.1 per cent from a year ago. The price index for medical care services rose 0.8% in October, pushing the year-over-year rise to 3%.
It will be the core rather than the headline measure of inflation that the Bank of England will be focusing on in the months to come, and the small rise in October has convinced a few City analysts that a rate increase in the first half of 2016 is possible. Economists had expected the index to rise by 0.2 percent. Over the past year, prices are up 0.2%.
Inflation has now hovered around zero for nine straight months as oil prices plunge and food prices fall, the Office for National Statistics (ONS) reported. That is because low inflation largely reflects transitory factors, namely, falls in oil prices at the turn of this year, and falling import prices caused by strength in trade-weighted sterling (up more than 10% over the past two years). “It does feel core inflation has firmed up a little bit this year and I would imagine it’d continue to do so as the economy continues to take up slack”. Unless that decline is repeated this November – which it won’t be – the annual inflation rate will mechanically rise.
A second month in a row of falling prices sparked predictions yesterday that Britain is on course this year for its lowest annual inflation rate since the 1930s. USA consumer prices rose modestly in October, 2015 as low gasoline costs and a strong dollar have suppressed inflation.
Low inflation reduces pressure on the Bank of England to hike interest rates.
In Asia, stock market indices were mixed, with the Shanghai Composite index down 0.1% after the inflation data and the Hang Seng index in Hong Kong down 1.8% but the Nikkei 225 in Japan up 0.1%. Yet even core inflation has hovered below the Fed’s goal.
The gain in the core index reflected a 0.3 percent increase in rents and a 0.7 percent advance in health care, the biggest since April. The October index for cakes, cupcakes and cookies was 282.1, up 1% from September and up 2.7% from October 2014.
Medical costs rose once again from September.
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Real hourly earnings increased by 0.2% for all employees.
