Headline Inflation Flat in November


The pace of headline inflation slowed from 0.3% in October to 0.0% in November as energy prices declined sharply.

The Consumer Price Index (CPI), reported by the Bureau of Labor Statistics (BLS), was unchanged in November on a seasonally adjusted basis, following a 0.3% increase in October. The “core” CPI, which excludes the volatile food and energy components, increased by 0.2% in November, the same increase as in October. Over the past twelve months, on a not seasonally adjusted basis, the CPI rose by 2.2% in November, slower than the 2.5% gain in October; while the “core” CPI increased by 2.2% in November, faster than the 2.1% gain in October.

In November, the increases in the indexes for shelter (0.3%), medical care (0.4%), recreation (0.4%) and education (0.2%) contributed to the increase in the “core” CPI. While the food index increased by 0.2% in November, the price index for a broad set of energy sources dropped by 2.2%, after the 2.4% increase in October. Despite the increases in the “core” CPI and the food index, the sharp decline in energy prices pulled down headline inflation and widened the gap between headline inflation and core inflation in November. Besides energy prices, the index for apparel declined too.

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 rose by 0.1% in November as the index for rent rose by 0.4%. In the first eleven 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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