U.S. consumer prices rise healthily in November, core prices ease

U.S. consumer prices rose healthily in November. The headline inflation rose 0.4 percent sequentially, bringing the year-on-year rate at 2.2. percent from October’s 2 percent. Three quarters of the price rise was because of energy prices that rose 3.9 percent sequentially, stimulated by a 7.3 percent rise in the price of gasoline. The overall food index remained the same for the second consecutive month in November.

Meanwhile, core inflation disappointed in the month, rising 0.1 percent sequentially. On a year-on-year basis, core rate slipped slightly to 1.7 percent. Apparel prices fell 1.3 percent, the largest drop since 1998. Airline fares also dropped 2.4 percent on the month. Within core inflation, the weighty shelter component was up 0.2 percent sequentially, slightly lower than October as prices for lodging away from home dropped 1.3 percent in November after rising the earlier three months.

The marginal fall in core inflation momentum was seen in both goods and services. Core goods prices went back in deflationary territory in sequential and year-on-year basis. Core services was up 0.2 percent sequential and 2.5 percent year-on-year.

“We remain confident that conditions are ripe for inflation to build in the months ahead, although the process is proving lengthy”, stated TD Economics.

The decline in prices of apparel is not expected to be repeated next month, implying core inflation would strengthen once again in December.

At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 20.4334. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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