The Consumer Price Index for baked foods and cereal products increased 0.8% in October.
Advertisement
Low inflation eases pressure on the Bank of England to increase interest rates, as CPI has now been significantly below its 2% target for almost a year.
“Falling goods prices, depressed by the strong dollar, are unlikely to be powerful enough to hold down overall core inflation if the services components-three-quarters of the core CPI, including rents-are accelerating”, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The signs of growing inflation following the recent upbeat jobs report could lead Fed policymakers to raise their benchmark short-term interest rate next month. “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”. The index for food at home rose 0.1 percent, while the index for food away from home rose 0.2 percent.
Tamer inflation rates signal changes ahead, while e-commerce is still pocketing the lion’s share of consumer cash.
The Office for National Statistics (ONS) said the consumer prices index fell by 0.1 per cent in October – the same fall as recorded the previous month. Core inflation remained at 1.9% for the second straight month, though it edged up fractionally for a fifth straight month. Over the year, gasoline has fallen 27.8 per cent.
Offsetting them are lower prices for goods like clothing, in part the outcome of the strong dollar effect on imports.
The Consumer Price Index increased 0.2 percent in October.
The unemployment rate has improved to a healthy 5 percent, compared to 5.7 percent a year ago. The core PCE gauge has missed the central bank’s 2% annual inflation target for 41 months in a row. A separate report showed the cost of imported goods fell 0.5 percent in October, marking the 14th decline in the last 16 months. The rental index also increased 0.3% after seeing a 0.4% rise in September.
Shelter prices rose 0.5 percent over the two-month period, and 5.1 percent over the year.
The October index for bread was 179.2, down 0.2% from September but up 2% from October 2014. Real wages have climbed 2.4% in the past 12 months, matching the highest level of the recovery and hitting a level last seen when the USA economy was emerging from the Great Recession in late 2009.
Advertisement
Shortly after the opening bell, the Dow Jones Industrial Average gained 18.58 points, or 0.11 percent, to 17,501.59.
