US CPI Data: Late Summer Inflation Spike Ends in October; Deflation Risk Nosedives on Election Results

U.S. inflation data released yesterday by the Bureau of Labor Statistics show that a two-month spike in headline inflation seems to have run its course. Both headline and core inflation measures are now close to or below the Fed’s 2 percent target. In a related development, the Atlanta Fed reports that deflation probabilities have nosedived since President Obama won re-election earlier this month.

The headline all-items CPI increased at an annual rate of just 1.81 percent in October, down from 7.48 percent in August and 7.06 percent in September. Most of the decrease came from a drop in energy prices, which had soared in the previous two months. New and used car prices also fell. Increases in the prices of food and apparel partly offset the decreases in energy and vehicles.

Measures of underlying inflation, which had not followed the late-summer spike of the all-items CPI, remained moderate.>>>Read more

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