Inflation Flatlines With QE in the Spotlight

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If the Bureau of Labor Statistics is to be believed, the prices paid by consumers for everyday goods are going nowhere fast. The headline consumer price index for all urban consumers, a highly cited measure of inflation, was flat in November compared to October, indicating that overall price levels for common goods were unchanged. This flatline follows a 0.1 percent contraction in the headline index between September and October and leaves the index up just 1.2 percent on the year.

Headline inflation has been particularly soft this year, mostly thanks to low price pressure in the pipeline (such as price increases for crude, semi-finished, and wholesale goods) and declining energy prices. The energy component of the CPI contracted 1 percent in November and is down 2.4 percent on the year. Within the component, gasoline has led much of the decline, falling 5.8 percent on the year. Prices for utility energy services such as electricity and gas are up, climbing 2.5 percent and 2.9 percent on the year, respectively.

Changes in the price of food have generally kept pace with the headline index. The food price index is up 1.2 percent on the year, with food at home up 0.6 percent and food away from home increasing 2.1 percent.

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