Headline November Inflation Unchanged, Below Consensus; Core Inflation Higher Than Expected

Tyler Durden's picture

As we noted earlier today, if there was one piece of news that could tip the scales away from a December taper announcement, it was a November inflation number that came in below expectations. Which it did: the headline November inflation print came in unchanged, on expectations of a 0.1% increase for the month, and up 1.2% for the year, below the 1.3% expected. However, before you BTFATH, note that core inflation - the Fed's preferred metric - actually was higher than expected, with prices ex food and gas, rising 0.2% in November on expectations of a 0.1% increase. Indeed, looking at the components, the headline inflation number was dragged down by gasoline prices which dipped 1.6% in November and overall Energy costs which fell 1.0%. Also notable: apparel inflation was -0.4% in November - the third consecutive month of declines. However, back to the core number, annual inflation was up 1.7% Y/Y just shy of the Fed's target, while core service inflation is up 2.4%.

 

Breakdown by component:

The breakdown of the key components from the report:

Food

 

The food index rose 0.1 percent in November, the same increase as in October. The index for food at home was unchanged, with major grocery store food groups mixed. The index for fruits and vegetables declined in November, falling 0.7 percent after rising in October. The indexes for meats, poultry, fish, and eggs and for nonalcoholic beverages also declined in November, each falling 0.2 percent. The index for cereals and bakery products, which declined in October, was unchanged in November. The index for other food at home rose in November, increasing 0.5 percent, and the index for dairy and related products rose 0.4 percent in November after falling in October. The food at home index has risen 0.6 percent over the last 12 months, the smallest 12-month increase since June 2010. The index for meats, poultry, fish, and eggs has posted the largest increase of the six major grocery store food groups over the last year, rising 2.8 percent. The index for nonalcoholic beverages has declined the most, falling 1.8 percent. The index for food away from home rose 0.3 percent in November, its largest increase since
April, and has risen 2.1 percent over the last year. 

 

Energy

 

The energy index declined 1.0 percent in November after falling 1.7 percent in October. The gasoline index, which fell 2.9 percent in October, declined 1.6 percent in November. (Before seasonal adjustment, gasoline prices fell 3.3 percent in November.) The index for natural gas also declined, falling 1.8 percent in November; this was its fifth decline in the last 6 months. Other energy indexes increased, however. The electricity index rose 0.3 percent in November, its third consecutive  increase. The index for fuel oil rose 0.4 percent in November after declining in October. The energy index has declined 2.4 percent over the last year, with the gasoline index down 5.8 percent and the index for fuel oil decreasing 4.1 percent. The electricity index has risen 2.9 percent over the last year, and the index for natural gas has increased 1.0 percent.

 

All items less food and energy

 

The index for all items less food and energy rose 0.2 percent in November after rising 0.1 percent in each of the 3 previous months. The shelter index rose 0.3 percent in November after a 0.1 percent increase in October. The rent index increased 0.2 percent, while the index for owners’ equivalent rent increased 0.3 percent. The index for lodging away from home rose 2.9 percent in November after declining 3.1 percent in October. The index for airline fares continued to rise, advancing 2.6 percent in November after a 3.6 percent increase in October. The recreation index rose 0.2 percent, and the index for used cars and trucks advanced 0.1 percent. The index for medical care was unchanged in November, with both the medical care commodities and medical care services components unchanged. The apparel index continued to decrease, falling 0.4 percent, its third consecutive decline. The index for household furnishings and operations fell 0.2 percent in November, as did the tobacco index. The index for new vehicles declined 0.1 percent for the second consecutive month.

 

The index for all items less food and energy increased 1.7 percent for the 12 months ending November. Indexes that have increased at a faster rate include airline fares (4.2 percent), shelter (2.4 percent), and medical care (2.2 percent). Indexes that increased more slowly or declined include household furnishings and operations (-1.4 percent), apparel (-0.1 percent), and new vehicles (0.6 percent).

So to summarize: if one looks at the headline CPI number, which the Fed has repeatedly said it does not, Taper may be delayed. If one looks at the Fed's preferred core number, however, the Taper may still be very much on for December.

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fonzannoon's picture

I have CNBC on behind me. Jim Grant is being interviewed. Santelli (I think) just asked him who would be hurt more by inflation, the wealthy, or a family with an income of 50k. I could swear I heard him answer "I don't know". 

Did any of the 2 other people on here who watch CNBC hear this?

SheepDog-One's picture

What gets me is the 'Wealthy...or peasants making $50K'....hell I wish I was still pulling down a solid $50K those times are long gone. Shows how aloof all these people are even Santelli.

thismarketisrigged's picture

i heard it, couldnt stop laughing. i just wake up every morning and hope that 1 day this shit will fucking end already, and end bad for the fuckers who started it.

fonzannoon's picture

Jim Grant.... Another "good guy" bites the dust.

Grande Tetons's picture

About as shocking to hear as Justin Bieber failing his Mensa exam. 

tallen's picture

There are no good guys on wall street, they're all trying to make money off you.

ChaosEquilibrium's picture

NO---Santelli asked Grant about "DEFLATION"---Who would be hurt more....a wealthy person with a lot of assets falling in price OR a middle income family who would view deflation as a 'sale' and can get needed stuff for cheaper!!

 

I DO NOT KNOW!

fonzannoon's picture

I swear I thought I heard him say inflation, but either way this is a stupid fucking question. This whole inflation/deflation thing is retarded. The combination of rising prices and falling wages are causing people to go bust. That is all that is going on.

ChaosEquilibrium's picture

I agree FONZ....I was not calling out your point.....Grant did not want to honestly answer the question.....and CNBC made sure to cut away to commercial before ANY answer could be discussed!!

fonzannoon's picture

I am glad you corrected me, I did not hear it 100%. Thanks for the clarification. I did not take it any other way. The question itself just seems so pointless...as with most other content on that stupid channel/

LetThemEatRand's picture

Did this come out at 13:00 o'clock?  

SheepDog-One's picture

Apparel inflation.....well gotta look tight at the unemployment check office.

Stoploss's picture

Shorts are shat.

SheepDog-One's picture

They've even managed to split inflation into 'good cop/bad cop' routine...so funny. 

TheFourthStooge-ing's picture

CORE inflation = Charlatan-Obfuscated Reality Evasion

kito's picture

apparently 5 dollar cups of overroasted, insipid coffee hasnt slowed down the consumer yet. once again, the death of the consumer has been greatly exaggerated. party on and buy stawks. its the only way to go for now. 

 

http://www.marketwatch.com/story/starbucks-sees-record-pre-christmas-card-sales-2013-12-17?link=MW_home_latest_news

SheepDog-One's picture

Don't worry, even if you don't buy stocks, your bank is buying them for you now with your deposits.

Rubbish's picture

If these numbers are true, the trotten can escape the effects of all this QE by downsizing their residence slightly, drive their vehicles longer and buy food in bulk. This requires some mindset change, set the thermostat a little lower and buy an extra blanket.

 

The rich haven't released all this cash, only exchanged it amoung themselves. Someday when the nickel and diming prevents any assemblance of freedom, it snaps but as we all know, they are very good at this. ObamaCare "may" be the straw that breaks our back but not till the full effects are felt by the majority.

 

Stack and Plan