Posted by Joseph Y. Calhoun, III

Consumer prices rose more than expected last month:

On a seasonally adjusted basis, the Consumer Price Index for All
Urban Consumers (CPI-U) rose 0.3 percent in October, the U.S. Bureau
of Labor Statistics reported today. The index has decreased 0.2
percent over the last 12 months on a not seasonally adjusted basis.

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.

The food index also increased in October, rising 0.1 percent after
declining in two of the previous three months. The index for food
away from home increased slightly, while the food at home index was
unchanged.  Within the food at home group, the index for dairy and
related products rose significantly, while the fruits and vegetables
index declined for the fourth straight month.

Cash for clunkers just keeps on giving. Used car prices rose the most of any item, 3.4%. I still can’t figure out what the Fed is watching that they are still concerned about deflation. Inflation is here now even with all the “slack” in the economy and the year over year comparisons only get harder from here.