Real Rents Continued to Edge Up, but the CPI Was Unchanged in November


The Bureau of Labor Statistics (BLS) reported the Consumer Price Index for All Urban Consumers (CPI) was unchanged on a seasonally adjusted basis in November. Further easing in energy prices offset a slight increase in the food index and a modest gain in the core index (all items less food and energy). On a year-over-year basis the pace of growth remains elevated, with the all items index up 3.4% (NSA) relative to November 2010.Nonetheless, this represents a slight deceleration from readings of 3.9% in September and 3.5% in October.


The energy index declined for the second month, slipping 1.6% (SA) in November due primarily to gasoline prices contracting an additional 2.4%. The household energy index also fell last month (-0.4%), with a 4.4% decline in the natural gas index more than offsetting increases of 2.7% and 0.4% for fuel oil and electricity, respectively. Even with this recent easing, the energy index increased considerably over the past year — 12.4% higher than its year-ago level. The gasoline index has increased 19.7% year-over-year, while the household energy index has risen 3.1%, with fuel oil up 25.1%, electricity up 2.7%, but natural gas down 1.3%.

The food index continued to inch higher in November, up 0.1%, the same as in October. The index for food at home edged down 0.1%, but this was offset by a modest 0.3% increase in the index for food away from home. Most major grocery store food groupings registered moderate declines from the previous month, including fruit and vegetables (-0.6%), dairy (-0.3%), and meats, fish and eggs (-0.1%). Cereals and bakery products (+0.3%) was the only category to register an increase.

Core CPI continued to drift higher, up 0.2% in November. Gains in the shelter (+0.2%), medical care (+0.4%) and apparel indexes (+0.6%) accounted for most of the increase. The shelter index was pushed higher by a 0.2% increase in the rent index and 0.1% rise in the index for owners’ equivalent rent.

Core CPI registered its 13th consecutive monthly increase, but these gains have remained modest, leaving the index up a moderate 2.2% compared to November 2010. Similarly, the shelter index, with its 14th consecutive month-over-month increase, is up 1.8% on a year-over-year basis. The subcomponents owners’ equivalent rent and rent of primary residence have risen 1.7% and 2.4%, respectively, since November 2010.

In real terms, the index of rent of primary residences continued to advance, up 0.2% in November after a 0.5% rise in October. However, the recent gains have not yet offset the marked decline observed earlier in 2011, which has caused real rents to remain 1.0% lower than they were in November 2010.

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