No change in the consumer-price index followed a 0.1 percent decrease the prior month, a Labor Department report showed today in Washington. The median forecast of 83 economists surveyed by Bloomberg called for a 0.1 percent advance. The core measure, which excludes food and fuel, rose 0.2 percent.
“Core inflation is still running too low,” said Laura Rosner, a U.S. economist at BNP Paribas SA in New York. BNP is the top-ranked forecaster of CPI in the past two years, according to data compiled by Bloomberg. “We probably have further weakness to see as retailers adjust prices to reduce the stockpiles that we know boosted growth.”
American Eagle Outfitters Inc. (AEO) has joined other retailers in offering more discounts to attract cash-strapped American shoppers this holiday season, underscoring limited cost pressures. Fed policy makers, who begin a two-day meeting today, are debating the outlook for inflation and the economy as they consider reducing $85 billion of monthly bond purchases designed to support the expansion.
Estimates for the consumer-price index ranged from a drop of 0.1 percent to a gain of 0.2 percent, according to the Bloomberg survey. Economists projected the core gauge would also increase 0.1 percent.
Stock-index futures rose, following yesterday’s gain for the Standard & Poor’s 500 Index, as investors weighed the inflation data for clues on the outcome of the Fed meeting. The contract on the S&P 500 expiring in March climbed 0.1 percent to 1,782.2 at 8:37 a.m. in New York.
Overall consumer prices rose 1.2 percent in the year ended in November after a 1 percent year-over-year gain in October. The core CPI climbed 1.7 percent from November 2012, matching the gains in the previous two months.
Energy costs fell 1 percent from a month earlier. The decline reflected cheaper gasoline and natural gas.
Falling gasoline costs this quarter have given households the wherewithal to spend more on other goods and services. The average cost of a gallon of regular gasoline has declined to $3.23 as of Dec. 15 from $3.39 on Oct. 1, according to AAA, the biggest U.S. motoring group.
New-automobile prices declined 0.1 percent for a second month. Clothing prices dropped 0.4 percent after declining 0.5 percent in each of the prior two months, while home furnishing costs also declined.
Owners-equivalent rent, one of the categories designed to track rental prices, increased 0.3 percent.
American Eagle Outfitters, the Pittsburgh-based apparel company, is among businesses reducing prices to lure consumers during the busiest shopping period of the year.
“We continue to operate in the most challenging sector of retail where there has been intense promotional competition and tepid consumer spending,” Chief Executive Officer Robert Hanson said on a Dec. 6 earnings call. “Sales have been promotionally driven, which is pressuring margins.”
Researcher ShopperTrak reiterated at the end of last month a forecast it gave in September that holiday sales will grow 2.4 percent, the smallest gain since 2009.
Hourly earnings adjusted for inflation rose 0.2 percent, after rising 0.1 percent the prior month. They were up 0.9 percent over the past year.
The slow rise in prices is keeping Fed policy makers cautious as they mull when, and by how much, to reduce their monthly asset purchases. St. Louis Fed President James Bullard, a supporter of the record stimulus, has said the low levels of inflation should mean any reduction in bond buying is more modest.
“A small taper might recognize labor-market improvement while still providing the committee the opportunity to carefully monitor inflation during the first half of 2014,” Bullard, a voter on policy this year, said last week in St. Louis. “Should inflation not return toward target, the committee could pause tapering at subsequent meetings.”
After their September meeting, Fed policy makers said in a statement that inflation persistently below its 2 percent objective could pose risks to economic performance.
The CPI is the broadest of three price gauges from the Labor Department because it includes goods and services. About 60 percent of the index covers prices consumers pay for services from medical visits to airline fares, movie tickets and rents.
Wholesale prices fell 0.1 percent in November, the third straight drop, according to Labor Department data released last week. November import prices declined 0.6 percent for a second month, the data showed on Dec. 12.
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Taken from: http://www.bloomberg.com/news/2013-12-17/consumer-prices-in-u-s-unchanged-in-november-on-cheaper-energy.html