CPI Misses Expectations As Housing Starts Plunge By 11.7%

The October Consumer Price Index came at 0.2%, on expectations of a 0.3% rise, compared to a previous read of 0.1%. The CPI ex-Food and Energy was unchanged, also below expectations of a 0.1% rise. And somehow, despite what is obviously a massive campaign for "value deflation", the BLS once again saw a barely notable increase in food prices (and an outright decline in some): "The food index rose 0.1 percent in October after a 0.3 percent increase in September. The index for food away from home rose 0.1 percent while the food at home index was unchanged.... The fruits and vegetables group posted the largest decline, falling 0.7 percent, while the index for nonalcoholic beverages fell 0.5 percent. " Elsewhere housing starts and building permits both missed expectations by a wide margin, coming in at 519 (vs exp of 598K), and 550K (vs exp of 568). Starts plunged from a revised 588K the month prior. One wonders how this contraction for the builders will be spun.

Some fairy tales from the CPI Report:

Food

The food index rose 0.1 percent in October after a 0.3 percent increase in September. The index for food away from home rose 0.1 percent while the food at home index was unchanged. Among the six major grocery store food groups that comprise the food at home index, the index for dairy and related products posted the largest increase, rising 1.1 percent. This was its fifth increase in the last six months and its largest since January. The index for meats, poultry, fish, and eggs also rose, increasing 0.6 percent as increases in the indexes for beef, poultry, and pork offset a decline in the eggs index. These increases offset declines in the remaining food at home groups. The fruits and vegetables group posted the largest decline, falling 0.7 percent, while the index for nonalcoholic beverages fell 0.5 percent. The indexes for cereals and bakery products and for other food at home both fell 0.2 percent. Over the past year, the indexes for cereals and bakery products and for nonalcoholic beverages have declined, while the index for other food at home was unchanged and the indexes for the remaining three groups have risen.

Energy

The energy index rose 2.6 percent in October, its fourth consecutive monthly increase. The gasoline index rose 4.6 percent in October after rising 1.6 percent in September. (Before seasonal adjustment, gasoline prices rose 3.3 percent in October.) The household energy index, which declined in September, rose in October, increasing 0.4 percent. The natural gas index fell 0.4 percent, but this decline was more than offset by a 0.4 percent increase in the electricity index and a 4.7 percent rise in the index for fuel oil. The indexes of all the major energy components have risen over the last 12 months.

On Housing Starts and Permits:

BUILDING PERMITS

Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 550,000. This is 0.5 percent (±3.0%)* above the revised September rate of 547,000, but is 4.5 percent (±3.1%) below the October 2009 estimate  of 576,000. Single-family authorizations in October were at a rate of 406,000; this is 1.0 percent (±1.3%)* above the revised September figure of 402,000. Authorizations of units in buildings with five units or more were at a rate of 121,000 in October.

HOUSING STARTS

Privately-owned housing starts in October were at a seasonally adjusted annual rate of 519,000. This is 11.7 percent (±8.6%) below the revised September estimate of 588,000 and is 1.9 percent (±9.6%)* below the October 2009 rate of 529,000. Single-family housing starts in October were at a rate of 436,000; this is 1.1 percent (±8.6%)* below the revised September figure of 441,000. The October rate for units in buildings with five units or more was 74,000.