CPI Steady After 4 Months of Gains
Consumer prices were flat in October as a sharp drop in the cost of gasoline and other energy products helped to blunt the biggest jump in beef and veal prices in 24 years.
The Labor Department’s reading Tuesday on the consumer price index, the government’s most closely watched inflation barometer, showed that overall consumer prices held steady last month after rising 0.3% in both August and September.
The flat CPI reading came after four straight months of price increases. Economists were expecting a 0.1% increase in overall prices.
“The average person is typically seeing some prices go up and some go down. But they are worried about the ones going up and are not thinking much about the ones going down,” said Joel Naroff, president of Naroff Economic Advisors.
Excluding energy and food prices, which can swing widely from month to month, “core” prices rose by a modest 0.2% in October, up from 0.1% increases registered in each of the prior two months. Even with the small pickup -- economists were expecting core prices to rise 0.1% in October -- the showing suggested that most prices were moderate.
With inflation currently not a problem, economists believe the Fed will have leeway to hold its key short-term interest rate at a 45-year low of 1% at its last meeting of the year Dec. 9.
After four straight months of going up, energy prices retreated 3.9% in October.
A drop in gasoline prices led the way. They declined 6.8% in October, the biggest decrease in five months. Fuel oil prices and natural gas prices each fell 1.5%. But in recent weeks energy prices have been rising again.
The drop in energy prices in October helped to offset rising prices for food, which rose a sharp 0.6%, the biggest increase in eight months.
The advance in food prices reflected a 3.8% jump in the price of beef and veal, the largest increase since February 1979, which put a dent in the wallets of meat lovers. Tight supplies have contributed to rising beef prices along with restrictions on imported beef from Canada, economists said.
Elsewhere in the report, new-car prices dipped 0.3% in October and airline fares were flat. Clothing prices rose 0.2% with the introduction of higher-priced fall and winter merchandise.
Medical care prices rose 0.3% and college tuition and fees rose 0.6%, sore spots for consumers.