Healthcare & Housing Cost Surge Sparks Biggest Rise In Core Consumer Prices Rise In 16 Months

Following September's strongest Core CPI gain since June 2014, October accelerated that modestly with CPI ex food and energy rising 1.9% YoY. Broad CPI rose 0.2% YoY (slightly better than the 0.1% expected rise) - the highest sicne December. Month-over-month saw new and used vehicle prices drop, Apparel prices drop 0.8% (most since Dec 2014), PCs drop 0.9%, but was notably offset by the bigger-weighting in Medical Care which rose 0.7% MoM (3.0% YoY) and Shelter rose 3.2% YoY.

 

 

The Breakdown....

 

The index for all items less food and energy increased 0.2 percent in October, the same increase as the previous month.

  • The shelter index continued to rise, increasing 0.3 percent for the second consecutive month. The rent index rose 0.3 percent and the index for owners' equivalent rent advanced 0.2 percent. The index for lodging away from home increased 0.8 percent, the same increase as in September.
  • The medical care index rose 0.7 percent in October, its largest increase since April. The hospital services index increased 2.0 percent, the index for prescription drugs rose 0.1 percent and the physicians' services index was unchanged. The index for personal care increased 0.5 percent in October, its largest increase since January.
  • The index for airline fares turned up in October, rising 1.5 percent and ending a string of three consecutive declines. The index for recreation increased 0.2 percent, the index for alcoholic beverages rose 0.6 percent, and the tobacco index advanced 0.4 percent.

In contrast to these increases, the apparel index declined in October, falling 0.8 percent, its largest decline since December 2014. The index for new vehicles, which fell 0.1 percent in September, fell 0.2 percent in October. The index for used cars and trucks declined for the sixth month in a row, falling 0.3 percent. The index for household furnishings and operations also declined in October, falling 0.1 percent.

The index for all items less food and energy has risen 1.9 percent over the past 12 months; this is the same figure as the 12 months ending September. Indexes that have increased more rapidly include
shelter (3.2 percent) and medical care (3.0 percent). Among the indexes that posted smaller increases are recreation (0.6 percent) and new vehicles (0.1 percent). Indexes that declined over the past year include airline fares (-5.2 percent), apparel (-1.9 percent) and used cars and trucks (-1.4 percent).

Indexes that have increased more rapidly include shelter (3.2 percent) and medical care (3.0 percent).

 

Charts: Bloomberg