Energy Prices Pushed CPI Higher in October


The CPI accelerated over the month of October reflecting increases in energy prices and the “core” CPI.

The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.3% on a seasonally adjusted basis in October, faster than the 0.1% increase in September. It was the fastest monthly growth rate in the past nine months. The “core” CPI, which excludes the volatile food and energy components, increased by 0.2% in October, following the 0.1% increases in September and August. Over the past twelve months, on a not seasonally adjusted basis, the CPI rose by 2.5% in October, a bigger increase than the 2.3% gain in September; while the “core” CPI increased by 2.1% in October.

In October, the price index for a broad set of energy sources increased by 2.4%, after the 0.5% decline in September. The indexes for shelter (0.2%), apparel (0.1%), medical care (0.2%), and education (0.2%) contributed to the increase in the “core” CPI. The increases in energy prices and the “core” CPI pushed the CPI up in October. Meanwhile, the food index declined by 0.1% in October. The indexes for communication (-0.4%), new vehicles (-0.2%) and recreation (-0.1%) declined.

NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the real rent index rises (declines). The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components).

The Real Rent Index was unchanged in October, after a 0.1% increase in September. In the first ten months of 2018, the monthly growth rate of the Real Rent Index was 0.1% on average, slower than the average of 0.2% in 2017.

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