US CPI Falls First Time In Six Months

The cost of living in the U.S. declined in October for the first time in six months, showing inflation remains below the Federal Reserve’s goal.

The consumer-price index dropped 0.1 percent, reflecting cheaper energy, clothing and new cars, after a 0.2 percent gain the prior month, a Labor Department report showed today in Washington. The median forecast of 85 economists surveyed by Bloomberg called for no change. Excluding volatile food and fuel, the so-called core measure rose 0.1 percent.

Companies from Wal-Mart Stores Inc. (WMT) to Macy’s Inc. (M) are holding the line on prices to attract more customers heading into the holiday-shopping period. Limited inflation also gives Fed officials the flexibility to maintain their $85 billion-a-month bond purchase program to stimulate the economy.

“Inflation is a distant concern at this time,” Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “It gives the Fed room for its continued quantitative-easing efforts.”

Estimates for the consumer-price index ranged from a drop of 0.2 percent to a gain of 0.2 percent, according to the Bloomberg survey. Economists projected the core gauge would rise 0.1 percent.

Stock-index futures rose after the inflation data and a separate report showing retail sales increased more than forecast in October. The contract on the Standard & Poor’s 500 Index expiring in December increased 0.2 percent to 1,788.2 at 8:51 a.m. in New York.

Bloomberg ^[1]

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Dean Popplewell ^[6]

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Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.

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