**MNI 5 THINGS: US Oct CPI As-Expected +0.3%,Core +0.2%>

--5 Things We Learned From The October CPI Data

By Kevin Kastner, Shikha Dave and Harrison Clarke

     WASHINGTON (MNI) - The following are the key points from the 

Consumer Price Index data for October released by the Bureau of Labor 

Statistics Wednesday: 

     - October CPI rose 0.3% month/month overall, exactly as expected 

and lifting the year/year rate to +2.5% on base effects of a decline in 

October 2017. Before rounding it was +0.331%, on the high side of 0.3%. 

Core prices were also as expected with a 0.2% gain, allowing the 

year/year rate to drift slightly lower to +2.1%, so the market reaction 

should reflect relief that there was little hurricane impact outside of 

an energy rebound and higher used vehicle prices, especially after last 

Friday's sharp PPI gains. 

     - Core CPI was +0.193% unrounded, so on the low side of +0.2%, with 

the major components mixed. The large owners' equivalent rents category 

rose 0.3%, while apparel prices were up 0.1%, medical care prices rose 

0.2%, and used car prices surged 2.6% (likely reflecting some vehicle 

replacement in the hurricane-affected areas). However, prices of new 

vehicles fell 0.2% in the month. 

     - MNI analysis showed analysts are extremely accurate when 

predicting both overall and core CPI, especially in October, so today's 

data are in line with that trend. Concerns that core PCE prices could 

see a sharp gain after Friday's PPI surge should be partially assuaged. 

     - The y/y rate for headline CPI rose to 2.5% in October vs 2.3% in 

September, reflecting a weak reading a year ago as much as the gain in 

the current month. The y/y rate for core CPI slipped to 2.1% from 2.2% 

in September. Overall, the data suggest steady, but still contained, 

inflation growth, keeping the FOMC on its gradual rate hike path. 

     - Energy prices rebounded by 2.4% in October after a 0.5% fall in 

September, with gasoline prices up 3.0% and electricity prices up 2.3%, 

but gas utilities prices down 0.6%. CPI excluding only energy was up 

0.2%, while food prices were down 0.1%. CPI excluding only food would 

have been up 0.4%.

     ** MNI Washington Bureau: 202-371-2121 ** 

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