Core consumer price inflation is still on track for 0%

11/17/2010 1:52 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

Inflation at the consumer level was nowhere to be seen in October.

The CPI, Consumer Price Index, edged upward by 0.2% for October. In September the CPI climbed 0.1%. Economists had been projecting a 0.3% increase for October.

Core inflation, that’s inflation discounting changes in the prices of food and fuel, came in at 0% for October. That lowered annual core inflation October 2009 to October 2010 to 0.6%.

The October figures will feed into the Federal Reserve’s fears of deflation. The Fed’s target annual inflation range is 2% to 2.5%. The actual headline CPI is up 1.2% in the last year. The 0.6% annual increase in the core inflation rate is the lowest annual increase since the government began tracking core CPI in 1957.

There’s now a good chance that the annual core inflation rate will fall even closer to 0% over the next few months. Core inflation was 0% in September and you have to go back to June to find core inflation above 0.1%.

The Federal Reserve’s program of quantitative easing is with us until the Federal Reserve sees some signs that inflation isn’t headed to 0% but has actually turned the corner and is starting to pick up. On the October data that turning point isn’t imminent.
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