Consumer Price Index rises 0.3 percent in October; flat shelter prices continue to drag down the index

On a seasonally adjusted basis, the Consumer Price Index (CPI) rose 0.3 percent in October 2009, the U.S. Bureau of Labor Statistics reported today:

The seasonally adjusted all items increase largely reflected advances in the indexes for energy and for new and used motor vehicles. The energy index rose for the fifth time in the last six months, advancing 1.5 percent as the indexes for gasoline, fuel oil, natural gas, and electricity all increased. The index for all items less food and energy rose 0.2 percent in October, the same increase as in September. The indexes for used cars and trucks and for new vehicles both rose sharply and together they accounted for over 90 percent of the increase in the index for all items less food and energy. The indexes for airline fares and medical care also increased, while the shelter index was unchanged and the indexes for apparel and recreation declined.

Wall Street economists had expected an increase of 0.2 percent. Long-dated treasury bonds dipped slightly in morning trading, whereas gold and inflation-protected treasury bonds increased slightly–a sign of increased inflationary expectations.

The largest component of CPI — shelter — came in flat for the second month in a row.  As noted here, there are signs that apartment rents may be slowly bottoming.  Someone out there thinks so, apparently, as evidenced by strength in shares of residential REITs. Of course, there are also signs that residential housing prices have bottomed. It won’t be too long before shelter prices start to rise. When that happens, expect the CPI to accelerate.

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