Core Inflation Creeps Higher in September
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Core Inflation Creeps Higher in September
Prices Byte by Dean Baker
For Immediate Release: October 17, 2007
Contact: Alan Barber, (202) 293-5380 x115
“Slow productivity growth and higher import prices could push inflation higher."
The core CPI inflation rate was 0.2 percent in
September, largely in line with expectations. The September figure
brought the annual rate of inflation in the core over the last three
months to 2.5 percent, slightly higher than the 2.1 percent rate over
the last year. The overall CPI rose by 0.3 percent for September,
driven by a 0.3 percent rise in energy prices and a 0.5 percent rise in
food prices. The overall CPI has risen at just a 1.0 percent annual
rate over the last three months, down from a 2.8 percent rate over the
last year.
There were a number of anomalies in the September data. On the high
side, hotel costs rose by 1.0 percent, more than reversing a 0.6
percent drop in August, and the apparel and recreation components both
increased by 0.3 percent. Apparel prices have fallen 1.8 percent over
the last year. The September rise followed a 0.5 percent fall in
August. Apparel prices may level off, but are unlikely to rise by much
in the foreseeable future. The recreation component had been virtually
flat over the last year. The September rise follows declines of 0.1
percent the prior two months. It also is not likely to be repeated.
On the low side, new car prices fell by 0.3 percent. This is likely
to be reversed in the months ahead, with car prices on a flat or
perhaps slightly downward price path. Tuition costs fell by 0.3
percent, the first decline since a 0.3 percent drop in August of 1998.
This drop is also likely to be reversed in the months ahead. Medical
care costs increased by a relatively low 0.3 percent, but this followed
rises of 0.6 percent and 0.5 percent in July and August, respectively.
Medical care costs have increased at a 4.6 percent rate over the last
year and are likely still on this path.
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