Posted by Joseph Y. Calhoun, III

The CPI rose in September:

On a seasonally adjusted basis, the Consumer Price Index for All  Urban Consumers (CPI-U) rose 0.2 percent in September, the Bureau of  Labor Statistics reported today. The increase was less than the 0.4  percent rise in August. The index has decreased 1.3 percent over the
last 12 months on a not seasonally adjusted basis.

The seasonally adjusted increase in the all items index was broad  based, although tempered by a decline in the food index. The all  items less food and energy index increased 0.2 percent in September  after increasing 0.1 percent in each of the previous two months.  Contributing to this increase were advances in the indexes for  lodging away from home, medical care, new vehicles, used cars and  trucks, and public transportation. The increase occurred despite
declines in the indexes for rent and owners’ equivalent rent, the  first decreases in those indexes since 1992. The energy index also  increased in September, as increases in the indexes for gasoline,  fuel oil and electricity more than offset a decline in the index for  natural gas.

In contrast to these increases, the food index declined, falling for  the sixth time in the last eight months. The index for food away from  home increased, but the food at home index declined as the indexes  for fruits and vegetables and for meats, poultry, fish and eggs fell
sharply. Both the food and energy indexes have declined over the past  12 months. The decline in the food index is the first 12-month  decrease in that index in over 40 years.

The headline numbers are still showing year over year price declines that has the deflation crowd all excited, but that will disappear by the end of the year as oil prices start showing large year over year increases. Ex Food and energy, prices are up 1.5% over the last year. Inflation will start to become more of a problem for the Fed next year.