Subdued Inflation for October

This morning, the government said that consumer prices rose by 0.4% last month. The increase was driven by higher gas prices. Wall Street had been anticipating that, and the report matched expectations.

But if you take out volatile food and energy prices, the core rate, then inflation rose by just 0.1% in October. That was below expectations of 0.1%.

I had been looking forward to this report because it could have shown the highest year-over-year increase in core inflation in eight years. Alas, that didn’t happen. Over the last 12 months, core inflation was 2.2%. This February, it was 2.3%.

Still, the trend is that inflation appears to be rising. We can’t be certain just yet. I’m not concerned about a modest rise in inflation. I’ve looked at this historical data and inflation hasn’t historically been a problem for stocks until it hits 5%. We’re a long way from that.

Posted by on November 17th, 2016 at 11:49 am


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