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Consumer Price Index: September Headline At 1.71%

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by: Doug Short
Summary

The year-over-year non-seasonally adjusted Headline CPI came in at 1.71%, down from 1.75% the previous month.

Investing.com was looking for 0.1% MoM change in seasonally adjusted Headline CPI and 0.2% in Core CPI.

Federal Reserve policy, which in recent history has focused on core inflation measured by the core PCE Price Index, will see that the more familiar core CPI is now at the PCE target range of 2 percent.

By Jill Mislinski

The Bureau of Labor Statistics released the September Consumer Price Index data Thursday morning. The year-over-year non-seasonally adjusted Headline CPI came in at 1.71%, down from 1.75% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.36%, down from the previous month's 2.39% and above the Fed's 2% PCE target.

Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data:

The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in September on a seasonally adjusted basis after rising 0.1 percent in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment.

Increases in the indexes for shelter and food were offset by declines in the indexes for energy and used cars and trucks to result in the seasonally adjusted all items index being flat. The energy index fell 1.4 percent as the gasoline index declined 2.4 percent. The food index increased 0.1 percent in September after being unchanged in each of the prior 3 months.

The index for all items less food and energy rose 0.1 percent in September after increasing 0.3 percent in each of the last 3 months. Along with the shelter index, the indexes for medical care, household furnishings and operations, and motor vehicle insurance all rose in September. The indexes for used cars and trucks, apparel, new vehicles, and communication all declined.

The all items index increased 1.7 percent for the 12 months ending September, the same increase as for the 12 months ending August. The index for all items less food and energy rose 2.4 percent over the last 12 months, also the same increase as the period ending August. The food index increased 1.8 percent over the last year, while the energy index decreased 4.8 percent. [More…]

Investing.com was looking for 0.1% MoM change in seasonally adjusted Headline CPI and 0.2% in Core CPI. Year-over-year forecasts were 1.8% for Headline and 2.4% for Core.

The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since the turn of the century. The highlighted two percent level is the Federal Reserve's Core inflation target for the CPI's cousin index, the BEA's Personal Consumption Expenditures (PCE) price index.

Headline and Core CPI since 2000

The next chart shows both series since 1957, the year the government first began tracking Core Inflation.

Headline and Core CPI

In the wake of the Great Recession, two percent has been the Fed's target for core inflation. However, at their December 2012 FOMC meeting, the inflation ceiling was raised to 2.5% while their accommodative measures (low Fed Funds Rate and quantitative easing) were in place. They have since reverted to the two percent target in their various FOMC documents.

Federal Reserve policy, which in recent history has focused on core inflation measured by the core PCE Price Index, will see that the more familiar core CPI is now at the PCE target range of 2 percent.

Original post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.