Inflation at the consumer level was nowhere to be seen in October.
The CPI, Consumer Price Index, edged upward by 0.2% for October. In September the CPI climbed 0.1%. Economists had been projecting a 0.3% increase for October.
Core inflation, that’s inflation discounting changes in the prices of food and fuel, came in at 0% for October. That lowered annual core inflation October 2009 to October 2010 to 0.6%.
The October figures will feed into the Federal Reserve’s fears of deflation. The Fed’s target annual inflation range is 2% to 2.5%. The actual headline CPI is up 1.2% in the last year. The 0.6% annual increase in the core inflation rate is the lowest annual increase since the government began tracking core CPI in 1957.
There’s now a good chance that the annual core inflation rate will fall even closer to 0% over the next few months. Core inflation was 0% in September and you have to go back to June to find core inflation above 0.1%.
The Federal Reserve’s program of quantitative easing is with us until the Federal Reserve sees some signs that inflation isn’t headed to 0% but has actually turned the corner and is starting to pick up. On the October data that turning point isn’t imminent.