Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  The Consumer Price Index Increased 0.1% in September
Posted Under: CPI • Data Watch • Inflation
Supporting Image for Blog Post

Implications: Consumer prices increased a modest 0.1% in September as the Fed looks to stay on track to finish quantitative easing at the end of next week. Consumer prices are up only 1.7% in the past year and one of the key reasons is America's booming energy production and, as a result, lower world oil prices. Energy prices declined for a third consecutive month in September and are down 0.6% from a year ago. Given the sharp drop in oil prices in the first half of October, look for more of the same in next month's report. However, there are sectors where inflation is higher. Food and beverage prices are up at a 3.7% annual rate in the past three months and up 2.9% in the past year. So if you only use the supermarket to gauge inflation, we can understand thinking the headline reports are too low, that "true" inflation is higher. In addition, housing costs are going up. Owners' equivalent rent, which makes up about ¼ of the overall CPI, rose 0.2% in September, is up 2.7% in the past year, and will be a key source of any acceleration in inflation in the year ahead. The worst news in today's report was that "real" (inflation-adjusted) average hourly earnings declined 0.2% in September. But these earnings are still up 0.3% from a year ago and workers are also adding to their purchasing power because of more jobs and more hours worked. Plugging today's CPI data into our models suggests the Fed's preferred measure of inflation, the PCE deflator, probably rose 0.1% in September. If so, it would be up 1.5% from a year ago, still below the Fed's target of 2%. We expect this measure to eventually hit and cross the 2% target, but given the bonanza from fracking and horizontal drilling, not until next year.

Click here for PDF version

Posted on Wednesday, October 22, 2014 @ 10:13 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.