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12 15 2015 | by Victor Xing | Economics

November Consumer Price Index (CPI): mostly on-consensus

The November Consumer Price Index (CPI) came in mostly on-consensus.
Consumer Price Index MoM
Consumer Price Index – MoM changes
  1. Headline aggregate CPI came in at 0.029% MoM vs. flat consensus
  2. Core (ex-food & energy) CPI at 0.179% MoM vs. 0.2% survey
  3. OER (owner equivalent rent, or proxy for rental inflation) at 0.209% MoM vs. 0.224% prior
  4. Medical services at 0.361% MoM vs. 0.704% prior
  5. Apparel (proxy for China import price) at -0.318% MoM vs. -0.794% prior
  6. New vehicles (proxy for Japan and Eurozone import prices) at 0.056% MoM vs. -0.194% prior
Overall, this is still a decent read with core components tracking their recent trends.  Medical services is still suffering from higher out-of-pocket costs following healthcare reforms, while apparel and new vehicles (core goods components) rebounded a touch.
Consumer Price Index - latest
Latest readings
To illustrate energy’s impact on inflation, below is a chart showing energy component’s fluctuation vs. other sub-indices – this is correlated with the headline CPI.
Consumer Price Index with Energy
Consumer Price Index – sub indices vs. energy
On a YoY basis, core services sub-indices show similar trends (medical services and OER straddle the 3% mark), core stands at 2.02% vs. 2.0% consensus, and core goods continue to be laggards of the index.
Consumer Price Index (YoY)
Consumer Price Index (YoY)
Overall, the inflation picture shows continued divergence between sectors sensitive to domestic growth (services components) and foreign economic conditions (goods components), with energy still inducing swings in the aggregate index.  This does not deviate from policymakers’ inflation view, and it would not cause concerns for FED policymakers who are currently attending their December meeting.  The much anticipated start of policy normalization is still expected to happen tomorrow, December 16th, 2015.
Original Quora article

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