November CPI up 0.8%, above estimate, on rising energy prices

Posted Dec 14th 2007 9:50AM by Joseph Lazzaro
Filed under: Bad News, Consumer Experience, Economic Data, Oil, Federal Reserve

Consumer prices rose 0.8% in November 2007, above the 0.6% consensus, led by higher gasoline prices, the U.S. Labor Department announced Friday.

Core CPI inflation, which excludes food and energy, rose 0.3%, slightly above the 0.2% consensus estimate, the Labor Department said.

The Consumer Price Index has now risen 4.3% in the past 12 months, a pace considerably above the U.S. Federal Reserve's tolerance zone or 'acceptable inflation rate.' The core CPI has risen 2.3% in the past 12 months.

"Clearly, it's not a good number," economist Steve Affinito told BloggingStocks Friday. "Some were hoping that the energy rise would not hit the CPI as hard, but it did. It suggests that inflation is accelerating, driven mostly by energy costs. Look for stores and businesses to start defending their margins by upping their prices, and this will not make the Fed's job any easier."

During November 2007 energy prices increased 5.7%. Gasoline prices surged 9.3%, and have increased more than 37% in 2007. Apparel prices rose 0.8% and medical care rose 0.4%.

Economic Analysis: The report is more bad news for the consumers, the U.S. economy, and the U.S. Federal Reserve. It reveals a price list that's beginning to feel the sting of persistent, elevated energy prices, as they work their way through the economy. Inflationary pressures are increasing, which will make it harder for the Fed to lower interest rates further to stimulate the U.S. economy. On the one hand, additional monetary policy easing may be needed to stimulate growth. On the other hand, the Fed must be careful regarding the amount of additional stimulus it applies, as it could propel even larger price increases at the consumer level.

Tags: consumer price index, CPI, economic growth, EconomicGrowth, energy prices, gasoline prices, GDP, inflation, inthenews, monetary policy, oil prices, U.S. economy, U.S. Federal Reserve

Print this

Reader Comments (Page 1 of 1)

12-14-2007 @ 2:10PM

Richard said...

There is a huge disconnect between the real economy for the average working American and those on Wall Street who deal mostly in arcane, secretive, unregulated money swaps that trade in billions of shares each day.

The statistic that is revealing though is the 37% rise in energy costs to the consumer. Much of that increase can be blamed directly on G. W. Bush whose saber-rattling over Iran caused the predicted panic when oil futures speculators drove the cost of oil to nearly $100 per barrel.

Though hovering somewhere around $93 per barrel today it's not clear where it will eventually go. One thing that is sure is the minority party Republicans are still calling all the shots. Democrats have virtually no power at all in spite of their slim majority.

We read just a few days ago the Republicans don't like or accept the NIE conclusion that Iran suspended their nuclear weapons program in 2003. This makes Republicans angry because War Forever is their key propaganda lever to retain the White House in 2008. Clearly, they have no interest in saving both American military or Iraqi citizens' lives. War is a Republican winner.

We can expect new "revised" information coming from congressional Republicans, bolstered by the continuing mushroom cloud rhetoric from G. W. Bush and his war hawks, warning our citizens that if Democrats win both the U.S. Congress and the White House in 2008, terrorists and al-Qaeda will be running through the aisles of Wal-Mart.

Does anyone hear $120 per barrel oil prices? Hurry up and gimme some more of those ethanol subsidies so I can drive my rollerskate Smart car down I-35.

Of course, insurance claims will skyrocket when Smart cars get run over by the 18-wheelers going 85 mph on their way from Mexico to Dallas. The only thing green about ethanol is the $7.3 billion government subsidy handed out to corn growers in Iowa, even if it takes more than one gallon of fossil fuel to produce 1 gallon of ethanol.

Yeah, Repubs, rattle those sabers!