CPI 1.8% YOY To November, Core CPI 1.7% YOY, Consumer Inflation Flat

The US Consumer Price Index, which measures inflation at the consumer level of the economy, was little changed at 0.4% in November and 1.8% year-over-year through November. Excluding volatile oil and food costs from the readings, “Core” CPI for November was o.4% and 1.7% YOY through November. You can view and download historical CPI data by scrolling down to our Data section on the right side of the site.

Inflation is within the Fed’s comfort zone of 1-2% and was in line with expectations following yesterday’s higher than expected business inflation number. If you click on the ‘All CPI, Month’ link in our Data section, it will display a chart at the top of the section where you can see how the volatility of food and especially energy prices causes inflation swings month to month. When this happens traders react accordingly. Rates are tied to bond trading and bonds don’t like inflation so they sell off on inflation fears, pushing price down and yield (or rate) up. Mortgage bonds are flat so far today following a big selloff yesterday after the business inflation was higher.

In a longer-term sense, many market participants feel inflation is the ultimate effect of massive government stimulus. Conversely, market traders think inflation shouldn’t be an issue for some time because aggregate demand is compromised by weakened consumers and businesses. Meanwhile the bond markets and rates see-saw wildly as these two schools of thought battle each other in market trading daily, weekly, monthly. Oil price volatility is the key driver this year.