U.S. Consumer Prices May Show Inflation in Check

The cost of living in the U.S. was probably little changed in November as gasoline prices dropped, a sign inflation remains in check, economists said before a report today.

The consumer-price index increased 0.1 percent last month after falling 0.1 percent in October, according to the median forecast of 82 economists surveyed by Bloomberg News. So-called core prices, which exclude volatile food and energy costs, may have also climbed 0.1 percent.

Companies like Target Corp. (TGT) and J.C. Penney Co. (JCP) Inc. are stepping up promotions during the holiday season to lure customers facing 8.6 percent unemployment and stagnant wages. Stable inflation gives Federal Reserve policy makers leeway to take additional steps to boost growth should the world’s largest economy falter.

“Consumers are going to be very resistant to higher prices and ultimately companies are going to have to adjust,” said Neil Dutta, an economist at Bank of America Corp. in New York. “Inflation is moderating.”

The Labor Department’s data is due at 8:30 a.m. in Washington. Economists’ estimates ranged from a decline of 0.1 percent to a gain of 0.4 percent.

The median forecast would mean consumer prices climbed 3.5 percent over the past year, matching the prior month’s gain which was the slowest since April. The core index is projected to increase 2.1 percent from November 2010.

Fed View

“Inflation has moderated since earlier in the year, and longer-term inflation expectations have remained stable” Fed officials said in a Dec. 13 statement after their monetary policy meeting.

Retailers are relying on a range of marketing maneuvers to keep consumers spending through Christmas. Cyber Monday came twice this year at J.C. Penney and Sears Holdings Corp. -- once after the Thanksgiving weekend and again a week later.

Target began a three-day “Almost Last Minute Sale” on Dec. 8 with markdowns on such items as Stanley Black & Decker Inc. coffee makers and gift card giveaways. The discount chain held the “Big Toy Event” on Dec. 1, offering half off a second item.

The average price of a gallon of regular gasoline at the pump fell to $3.38 last month from $3.43 in October, according to data from AAA, the country’s biggest auto group.

Fuel costs may keep declining as the European debt crisis threatens to slow global growth. The average gasoline price dropped to $3.26 a gallon Dec. 14, the lowest since February.

Europe’s Influence

Stocks have fallen since Oct. 31 on concern a European default might tip the U.S. back into a recession. The Standard & Poor’s 500 Index was down 3 percent through yesterday.

The Fed’s preferred price gauge, The Commerce Department’s measure that excludes food and fuel and is tied to consumer spending, rose 0.1 percent in October after no change the prior month. It was up 1.7 percent in the year ended in October, at the low end of Fed policy makers’ long-run projection of 1.7 percent to 2 percent.

A Labor Department report yesterday showed prices paid to producers excluding food and fuel rose 0.1 percent in November, less than forecast, while all producer prices rose 0.3 percent, paced by a gain in food expenses.

Import prices in the U.S., reported Dec. 14, rose 0.7 percent.

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.

                        Bloomberg Survey

==============================================================
                               CPI     Core      CPI     Core
                                        CPI               CPI
                              MOM%     MOM%     YOY%     YOY%
==============================================================
Date of Release              12/16    12/16    12/16    12/16
Observation Period            Nov.     Nov.     Nov.     Nov.
--------------------------------------------------------------
Median                        0.1%     0.1%     3.5%     2.1%
Average                       0.1%     0.1%     3.5%     2.1%
High Forecast                 0.4%     0.3%     3.7%     2.3%
Low Forecast                 -0.1%     0.0%     3.3%     2.0%
Number of Participants          82       80       36       37
Previous                     -0.1%     0.1%     3.5%     2.1%
--------------------------------------------------------------
4CAST                         0.0%     0.1%     ---      ---
ABN Amro                      0.2%     0.2%     3.6%     2.2%
Action Economics              0.2%     0.0%     3.6%     2.0%
Aletti Gestielle              0.1%     ---      ---      ---
Ameriprise Financial          0.1%     0.2%     3.5%     2.1%
Banca Aletti                  0.1%     0.1%     ---      ---
Banesto                       ---      ---      3.6%     2.2%
Bantleon Bank AG              0.1%     0.1%     ---      ---
Barclays Capital              0.0%     0.2%     3.4%     2.2%
Bayerische Landesbank         0.0%     0.1%     3.4%     2.1%
BBVA                          0.2%     0.1%     ---      ---
BMO Capital Markets           0.2%     0.1%     3.6%     2.1%
BNP Paribas                  -0.1%     0.1%     3.3%     2.1%
BofA Merrill Lynch           -0.1%     0.1%     ---      ---
Briefing.com                  0.1%     0.1%     ---      ---
Capital Economics            -0.1%     0.1%     3.4%     2.1%
CIBC World Markets            0.0%     0.1%     3.4%     2.1%
Citi                          0.0%     0.1%     3.4%     2.1%
ClearView Economics           0.2%     0.1%     ---      ---
Comerica                      0.1%     0.1%     ---      ---
Credit Suisse                 0.0%     0.2%     ---      ---
Daiwa Securities America      0.0%     0.1%     ---      ---
Danske Bank                   0.2%     0.1%     3.6%     2.1%
DekaBank                      0.0%     0.1%     3.4%     2.1%
Desjardins Group              0.0%     0.1%     3.4%     2.1%
Deutsche Bank Securities      0.1%     0.2%     ---      ---
Deutsche Postbank AG          0.1%     0.1%     3.5%     2.1%
DZ Bank                       0.1%     0.1%     ---      ---
Exane                         0.1%     0.1%     ---      ---
Fact & Opinion Economics      0.1%     0.2%     ---      ---
First Trust Advisors          0.2%     0.2%     ---      ---
FTN Financial                 0.1%     0.1%     3.5%     2.1%
Goldman, Sachs & Co.          0.0%     0.1%     ---      ---
Helaba                        0.3%     0.2%     3.7%     2.2%
High Frequency Economics      0.0%     0.1%     ---      ---
HSBC Markets                  0.0%     0.1%     3.3%     2.1%
Hugh Johnson Advisors         0.1%     0.2%     ---      ---
IDEAglobal                    0.1%     0.1%     3.5%     2.0%
Informa Global Markets        0.2%     0.1%     3.5%     2.1%
ING Financial Markets         0.1%     0.0%     3.5%     2.0%
Insight Economics             0.0%     0.1%     ---      ---
Intesa-SanPaulo               0.0%     0.2%     ---      2.2%
J.P. Morgan Chase             0.0%     0.2%     ---      ---
Janney Montgomery Scott       0.1%     0.1%     3.6%     2.2%
Jefferies & Co.               0.0%     0.2%     ---      ---
Landesbank Berlin             0.4%     0.3%     ---      ---
Landesbank BW                 0.0%     0.1%     ---      ---
Market Securities             0.0%     0.1%     ---      ---
MET Capital Advisors          0.2%     ---      ---      ---
Mizuho Securities             0.1%     0.0%     ---      ---
Moody’s Analytics            -0.1%     0.1%     ---      ---
Morgan Keegan & Co.           0.2%     0.1%     ---      ---
Morgan Stanley & Co.          0.0%     0.2%     ---      ---
National Bank Financial       0.0%     0.1%     3.5%     2.1%
Natixis                       0.2%     0.1%     3.6%     2.1%
Newedge                       0.1%     0.1%     ---      ---
Nomura Securities             0.0%     0.1%     ---      ---
Nord/LB                       0.2%     0.1%     3.6%     2.1%
OSK Group/DMG                 0.0%     0.1%     ---      ---
O’Sullivan                   -0.1%     0.1%     ---      ---
Parthenon Group               0.2%     0.2%     ---      ---
Pierpont Securities           0.0%     0.2%     ---      ---
PineBridge Investments        0.1%     0.1%     ---      ---
PNC Bank                      0.1%     0.2%     ---      ---
Prestige Economics            0.2%     0.3%     ---      ---
Raiffeisenbank International  0.0%     0.1%     3.4%     2.1%
Raymond James                 0.1%     0.1%     3.5%     2.1%
RBC Capital Markets           0.0%     0.1%     3.4%     2.1%
RBS Securities                0.0%     0.1%     ---      ---
Scotia Capital                0.1%     0.1%     3.5%     2.1%
Societe Generale              0.0%     0.2%     ---      ---
Standard Chartered            0.1%     0.1%     3.4%     2.3%
State Street Global Markets   0.0%     0.1%     3.4%     2.0%
Stone & McCarthy Research     0.1%     0.1%     ---      ---
TD Securities                 0.1%     0.1%     3.5%     2.1%
UBS                          -0.1%     0.2%     3.3%     2.2%
UniCredit Research            0.1%     0.1%     ---      ---
Union Investment              0.1%     0.2%     3.5%     2.2%
University of Maryland        0.1%     0.1%     ---      ---
Wells Fargo & Co.             0.1%     0.2%     3.6%     2.2%
WestLB AG                     0.1%     0.1%     3.5%     2.1%
Westpac Banking Co.           0.1%     0.1%     ---      ---
Wrightson ICAP               -0.1%     0.2%     ---      ---
==============================================================

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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

Enlarge image

Consumer Prices in U.S. Stagnate as Gasoline Costs Decrease

Spencer Platt/Getty Images

Overall consumer prices increased 3.4 percent in the 12 months ended November, the smallest year-over-year increase since April.

Overall consumer prices increased 3.4 percent in the 12 months ended November, the smallest year-over-year increase since April. Photographer: Spencer Platt/Getty Images