Consumer Prices in U.S. Likely Little Changed

The cost of living in the U.S. was probably little changed in October, restrained by falling energy prices, economists said before a report today.

The consumer-price index didn’t increase for the first time in four months after advancing 0.3 percent in September, according to the median forecast of 86 economists surveyed by Bloomberg News. Other figures may show manufacturing picked up last month.

Cheaper raw-material costs compared with earlier this year may make it easier for some retailers to hold the line on prices during the holiday shopping season as they compete for consumers coping with stagnating incomes. Less inflation also gives Federal Reserve officials more leeway to take additional measures should the economy falter.

“Inflation pressures should remain relatively subdued,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “Over the next several months we’re likely to see some volatility from fuel and petroleum prices. But beyond that, at the core level, prices are going to remain relatively in check.”

At the same time, manufacturing growth is being sustained. Production at the nation’s factories, mines and utilities increased 0.4 percent in October after a 0.2 percent gain the previous month, according to the median estimate in a Bloomberg survey of economists. Projections range from increases of 0.1 percent to 0.8 percent. The Fed’s figures are due at 9:15 a.m.

Smaller Gains

The so-called core consumer price gauge, which excludes volatile food and fuel prices, may have climbed 0.1 percent for a second consecutive month, the smallest back-to-back gains this year. The Labor Department’s data are due at 8:30 a.m. in Washington. Economists’ CPI estimates ranged from a decline of 0.2 percent to a gain of 0.3 percent.

The median forecast for the October CPI would mean prices climbed 3.7 percent over the past year, the slowest year-over- year gain since July. The core index is projected to increase 2.1 percent compared with October 2010.

The Fed’s preferred consumer price gauge, which excludes food and fuel, rose 1.6 percent in September from the same month last year, according to Commerce Department figures. Fed policy makers aim for long-run overall inflation of 1.7 percent to 2 percent.

Inflation “appears to have moderated since earlier in the year,” Fed officials said in a Nov. 2 statement after their most recent monetary policy meeting.

Raw-Material Costs

A Labor Department report yesterday showed the producer- price index in October fell for the first time in four months, while the cost of goods excluding fuel and food did not advance for the first time since November 2010. Import prices in the U.S., reported Nov. 10, dropped 0.6 percent from the prior month as oil and food expenses retreated.

The cost of a gallon of regular gasoline at the pump averaged $3.43 in October, down from $3.59 a month earlier, according to data from AAA, the nation’s largest auto group.

The CPI is the broadest of the three monthly price measures from the Labor Department because it includes goods and services. About 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets.

Higher materials costs that have now started to recede as well as seasonal clearance of patio furniture “hurt” gross margin in the third quarter at Lowe’s Cos., the Mooresville, North Carolina-based company said Nov. 14.

“We expect inflation to be a little bit lower,” Robert Hull, chief financial officer for Lowe’s, the second-largest U.S. home-improvement retailer, said on a conference call with analysts.

                      Bloomberg Survey

====================================================
                               CPI     Core     Ind.
                                        CPI    Prod.
                              MOM%     MOM%     MOM%
====================================================

Date of Release              11/16    11/16    11/16
Observation Period            Oct.     Oct.     Oct.
----------------------------------------------------
Median                        0.0%     0.1%     0.4%
Average                       0.0%     0.1%     0.4%
High Forecast                 0.3%     0.2%     0.8%
Low Forecast                 -0.2%    -0.1%     0.1%
Number of Participants          86       84       83
Previous                      0.3%     0.1%     0.2%
----------------------------------------------------
4CAST                         0.0%     0.1%     0.4%
ABN Amro                      0.1%     0.2%     0.4%
Action Economics              0.0%    -0.1%     0.5%
Aletti Gestielle              0.0%     0.1%     0.5%
Ameriprise Financial          0.0%     0.2%     0.2%
Banca Aletti                  0.0%     0.1%     0.3%
Banesto                       ---      ---      0.6%
Bank of Tokyo- Mitsubishi     0.0%     0.2%     0.3%
Barclays Capital              0.0%     0.2%     0.4%
Bayerische Landesbank         0.0%     0.2%     0.4%
BBVA                          0.1%     0.1%     0.2%
BMO Capital Markets           0.0%     0.1%     0.2%
BNP Paribas                   0.0%     0.1%     0.4%
BofA Merrill Lynch            0.0%     0.1%     0.5%
Briefing.com                  0.1%     0.1%     0.2%
Capital Economics             0.0%     0.2%     0.4%
CIBC World Markets           -0.1%     0.1%     0.4%
Citi                          0.1%     0.2%     0.6%
Clariden Leu                  0.0%     ---      ---
ClearView Economics           0.1%     0.2%     0.3%
Comerica                      0.2%     0.1%     0.5%
Commerzbank AG                0.0%     0.1%     0.7%
Credit Agricole CIB           0.0%     0.1%     0.6%
Credit Suisse                 0.0%     0.2%     0.3%
Daiwa Securities America      0.0%     0.1%     0.4%
Danske Bank                   0.0%     0.1%     0.4%
DekaBank                      0.0%     0.1%     0.3%
Desjardins Group              0.0%     0.1%     0.4%
Deutsche Bank Securities      0.0%     0.1%     0.5%
Deutsche Postbank AG          0.0%     0.1%     0.3%
DZ Bank                       0.0%     0.1%     0.1%
Exane                        -0.1%     0.1%     0.3%
Fact & Opinion Economics     -0.1%     0.1%     0.3%
First Trust Advisors          0.0%     0.2%     0.4%
FTN Financial                 0.0%     0.1%     0.2%
Goldman, Sachs & Co.          0.0%     0.1%     0.5%
Helaba                        0.1%     0.2%     0.4%
High Frequency Economics      0.1%     0.2%     0.1%
HSBC Markets                  0.0%     0.1%     0.5%
Hugh Johnson Advisors         0.2%     0.2%     0.5%
IDEAglobal                    0.1%     0.1%     0.4%
IHS Global Insight            0.0%     0.1%     0.3%
Informa Global Markets        0.0%     0.1%     ---
ING Financial Markets         0.0%     0.1%     0.5%
Insight Economics             0.0%     0.1%     0.7%
Intesa-SanPaulo               0.0%     0.1%     0.4%
J.P. Morgan Chase            -0.1%     0.1%     0.6%
Janney Montgomery Scott      -0.1%     0.1%     0.4%
Jefferies & Co.              -0.1%     0.2%     0.6%
Landesbank Berlin             0.2%     0.1%     0.4%
Landesbank BW                 0.1%     0.2%     0.5%
Maria Fiorini Ramirez         0.0%     0.1%     0.5%
Market Securities             0.0%     0.1%     0.3%
MET Capital Advisors          0.3%     ---      0.7%
Mizuho Securities             0.2%     0.1%     0.4%
Moody’s Analytics             0.0%     0.1%     0.3%
Morgan Keegan & Co.           0.2%     0.1%     0.2%
Morgan Stanley & Co.         -0.1%     0.1%     0.5%
National Bank Financial       0.0%     0.1%     0.5%
Natixis                       0.0%     0.1%     0.2%
Newedge                       0.0%     0.1%     0.5%
Nomura Securities             0.0%     0.1%     0.4%
Nord/LB                       0.0%     0.1%     0.3%
OSK Group/DMG                 0.0%     0.1%     0.4%
Parthenon Group               0.2%     0.2%     0.7%
Pierpont Securities          -0.1%     0.1%     0.2%
PineBridge Investments        0.0%     0.1%     0.2%
PNC Bank                      0.0%     0.2%     0.8%
Prestige Economics            0.2%     0.1%     ---
Raiffeisenbank International  0.1%     0.1%     0.4%
Raymond James                 0.0%     0.1%     0.6%
RBC Capital Markets           0.0%     0.2%     0.4%
RBS Securities               -0.1%     0.1%     ---
Scotia Capital                0.0%     0.1%     0.6%
Societe Generale             -0.1%     0.1%     0.4%
Standard Chartered           -0.2%     0.2%     0.5%
State Street Global Markets   0.0%     0.1%     0.5%
Stone & McCarthy Research     0.0%     0.1%     0.5%
TD Securities                 0.1%     0.1%     0.6%
UBS                           0.0%     0.1%     0.2%
UniCredit Research            0.0%     0.2%     0.4%
Union Investment              0.1%     0.2%     0.3%
University of Maryland        0.0%     0.2%     0.3%
Wells Fargo & Co.             0.0%     0.1%     0.4%
WestLB AG                     0.0%     0.1%     0.5%
Westpac Banking Co.           0.0%     0.1%     0.6%
Wrightson ICAP                0.0%     0.1%     0.5%
====================================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

Enlarge image

Consumer Prices in U.S. Were Probably Little Changed

Matthew Staver/Bloomberg

Customers shop during the grand opening of a Hennes & Mauritz AB (H&M) store in Denver, Colorado, U.S.

Customers shop during the grand opening of a Hennes & Mauritz AB (H&M) store in Denver, Colorado, U.S. Photographer: Matthew Staver/Bloomberg