Inflation Stays Moderate

The Fed is pushing up interest rates, afraid that the strong economy will create inflation. So far, inflation is staying close to the 2.2 percent figure that economists target.

For instance, the government reports that The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in October on a seasonally adjusted basis after rising 0.1 percent in September.

Over the last 12 months, the all items index rose 2.5 percent before seasonal adjustment.

However, an increase in the gasoline index was responsible for over one-third of the seasonally adjusted increase in the all items index; advances in the indexes for shelter, used cars and trucks, and electricity also contributed.

The increases in the gasoline and electricity indexes led to a 2.4-percent rise in the energy index. The food index, in contrast, declined slightly in October.

Take food and energy out of the equation, and inflation rose 0.2 percent in October following a 0.1-percent increase in September.

Along with the indexes for shelter and for used cars and trucks, the indexes for medical care, household furnishings and operations, motor vehicle insurance, and tobacco all increased in October.

The indexes for communication, new vehicles, and recreation all declined.

The all items index rose 2.5 percent for the 12 months ending October, a larger increase than the 2.3-percent increase for the 12 months ending September.

The index for all items less food and energy rose 2.1 percent for the 12 months ending October. The energy index increased 8.9 percent, while the food index increased more modestly, advancing 1.2 percent over the last 12 months.

Copyright Today’s Credit Unions