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Gasoline, Housing Push Up Cost of Living

Inflation trends tend to evolve slowly, though individual components like energy prices or food prices can be volatile month to month. There are three key points to note from the September CPI report from the Bureau of Labor Statistics:

First, the total CPI rose 0.3 percent for the month, led by a large 2.9 percent spike in energy prices (gasoline in particular), and a sizable 0.4 percent increase in the cost of shelter (see the red lines in table above).

Second, the total CPI is up 1.5 percent over the past year while the core CPI, which excludes volatile food and energy prices, is up 2.2 percent over the past year. The total CPI is running well below the 2.0 percent Fed target (and below its long-term average of 2.1 percent), while the core CPI is slightly ahead its long-term average of 2.0 percent (see black lines in table, as well as Chart 1).

Third, within the core, price pressures are NOT evenly distributed.  Price pressures continue to be concentrated in services such as shelter, medical care and education, while core good prices are essentially flat or falling slightly – though medical care goods are the notable exception (purple lines in table, as well as Chart 2).

These long-term trends are likely to remain in place for some time to come.

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