October 18, 2017 – The Consumer Price Index (CPI) tells us of any inflationary pressures in the economy. The CPI measures the average price levels of a basket of goods and services purchased by consumers. The index starts with a base time period (1982-1984, currently) and shows the overall increase since that time. As with many economic indicators, it can be volatile from month to month with food and energy prices often leading the volatility.
The Consumer Price Index increased 0.5% in September, below expectations of a 0.6% increase. Core CPI, which excludes food and energy rose 0.1%, also below expectations of 0.2%. Year-over-year CPI is up 2.2% and core CPI is up 1.7% over the last year. Energy jumped even higher than last month to 6.1% with gasoline contributing the most with an increase of 13.1%.
Similar to August, CPI is still feeling the impact of the hurricanes through prices this month. Housing costs, auto insurance, and gasoline showing increases in September of 0.2%, 0.5%, and 13.1% respectively. These price increases are linked to the storms’ destruction of houses, cars, and oilrigs and refineries. However taking out food and energy displays a more accurate reading of price movements without the heavy weight of the hurricanes. Year-over-year core CPI remains at 1.7%. As of right now, there is a predicted 75% chance of a rate hike in December that will turn into 100% barring any extraneous geopolitical event.