The U.S. Bureau of Labor Statistics (BLS) released its October Inflation report on November 13th, 2019, for the 12 months through the end of October 2019.
Annual Inflation is Up Very Slightly
- Annual inflation in October was 1.76% up from September’s 1.71% and still virtually unchanged from August’s 1.75%.
- Inflation has been in a narrow range throughout 2019. 1.79% in May, 1.81% in July, 1.65% in June, with a high of 2.00% in April.
- Inflation peaked at 2.95% in July 2018.
- The CPI-U index in October was 257.346
- Monthly Inflation for October was 0.23%, September was 0.08%, August was -0.01%, July was 0.17%, June was virtually zero at 0.02%, May was 0.21%, April was 0.53%, March was 0.56%.
- Next release December 11th
During 2019 the annual inflation rate hovered between a low of 1.52% in February and 2.00% (which occurred in April). But the range was actually much smaller. From May through October the high was 1.81% in July and the low was 1.65% in June. Using the single decimal place calculations of the Bureau of Labor Statistics it is actually difficult to see the difference between July through October. Since the BLS says they are 1.8%, 1.8%, 1.7%, 1.8%. By looking at the two-digit results however we see 1.81%, 1.75%, 1.71%, and 1.76%. So rather than a 0.1% increase from September to October we see that it was actually half that at 0.05%.
According to the BLS commissioner’s report, “The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in October on a seasonally adjusted basis after being unchanged in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.8 percent before seasonal adjustment. The energy index increased 2.7 percent in October after recent monthly declines and accounted for more than half of the increase in the seasonally adjusted all items index; increases in the indexes for medical care, for recreation, and for food also contributed. The gasoline index rose 3.7 percent in October and the other major energy component indexes also increased. The food index rose 0.2 percent, with the indexes for both food at home and food away from home increasing over the month.”
Read the full commentary here.
Seasonally Adjusted Inflation Table
From the October 2019 column in the table above we can see that on a monthly seasonally adjusted basis, Gasoline was up 3.7% after being down -2.4% in September. On a Non-adjusted annual basis, however, gasoline was still down -7.3% over the year and fuel oil was down -10.6%. On an annual basis, Food away from home was up 3.3%, shelter was also up 3.3%, Used cars and trucks were up 1.4% and Medical care services were up 5.1%.
Current Inflation Chart
As we can see from the chart below, throughout 2019 the inflation rate has stayed within a fairly narrow range peaking at 2.0% in April and bottoming at 1.52% in February. The index remains below its moving average indicating that the trend is still down. However, they are getting closer together so a small spike upward next month could easily cross above the moving average.
Federal Reserve Actions
Since the beginning of 2018 the Federal Reserve (FED) has followed a policy of Quantitative Tightening (QT) i.e. they have reduced the amount of “debt” they held. This debt was acquired during the 3 phases of quantitative easing they employed in an effort to add liquidity to the market to combat the 2008 crash. From the chart, we can see that through QT they began eliminating some of the debt they held. But over the last two months, we can see an uptick indicating that they have once again begun accumulating debt again rather than eliminating it. Thus creating inflationary pressures.
FED Funds Rate
Another indicator of the shift from tight money to easy money is the reduction in the Fed Funds Rate i.e. the rate the FED charges member banks. The FED drastically reduced interest rates in August falling from 2.40% in July to 2.13% in August. It further reduced rates in September to 2.04%.
See our Moore Inflation Predictor to see our current projections.
Not Seasonally Adjusted Monthly Inflation Rates
See: Monthly Inflation Rate for more information and a complete table of Unadjusted Monthly Rates.
The misery index as of November 2019 (based on the most recent official government inflation and unemployment data for the 12 months ending in October) is at 5.36%. up slightly from September’s 5.21%. It was 5.45% in August and 5.51% in July. It has only been this low a few times since data became available in 1948. Surprisingly, one of those times was in September of 2015 when the Misery Index briefly neared 5%. Before that, we had 2006, 1998 and 1965 which were considerably higher at 5.71%, 5.74%, and 5.70% respectively. May of 1959 was 5.45% so you have to go all the way back to 1955 to see a Misery index below 5%.
NYSE Rate of Change (ROC)©
The NYSE ROC is once again in Buy/Hold territory after crossing above its moving average.
Last month the NYSE index was down -2.99% on a monthly basis but this month it gained a whopping 5.49% totally wiping out last month’s loss and tacking on a nice gain as well. On an annual basis, the NYSE is up 8.59%!
See the NYSE ROC for more info.
NASDAQ Rate of Change (ROC)©
This month the NASDAQ ROC shot up from a negative -3.26 monthly return in October to a massive 7.37% return this month. This results in a 17.85% annual return in the NASDAQ. Of course, this is measuring from the dip in 2018.
See NASDAQ ROC for more.
Regional Inflation Information
The U.S. Bureau of Labor Statistics also produces regional data. So if you are interested in more localized inflation information you can find it here.
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