Consumer Prices Flat in November

Washingon, DC, December 15, 2006–Consumer prices were unchanged in November, as lower energy and car prices offset increases in costs for homeownership and medical care, the Labor Department reported Friday.

Core prices–which exclude volatile food and energy prices–were also unchanged in November, the lowest core inflation since June 2005.

Economists expected 0.2% gains for both headline and core inflation.

The CPI is up just 2% in the past year, following 0.5% declines September and October and November’s flat reading.

The core CPI is up 2.6% in the past year, still above the FOMC’s comfort zone but moving in the right direction. Core inflation has risen at a 1.6% annual rate in the past three months.

The core CPI peaked at 2.9% year-over-year in September.

With the CPI flat and hourly wages up 0.2%, real (that is, inflation-adjusted) weekly earnings rose 0.2% in November and are up 2.6% in the past year. Inflation fell or rose at a slower rate for most categories of goods and services.

Housing was the exception, with prices up 0.4% on hefty gains in hotel fares and owners’ equivalent rent. The CPI excluding shelter fell 0.2%.

Energy prices fell 0.2% in November, the third decline in a row. However, gasoline prices have ticked higher since the November survey. Energy prices are down 3.8% in the past year.

Food prices fell 0.1%, as fruit and vegetable prices tumbled. Medical care prices rose 0.2%, the smallest gain since July. Apparel costs fell 0.3%, the second decline in a row.

Shelter costs rose 0.4%, including a 0.4% rise in rents and a 0.3% gain in owners equivalent rent. Transportation prices fell 0.9%. New car prices dropped 0.7%. Airfares fell 4.8%, the biggest drop in seven years.