Cost of Living in U.S. Probably Rose at Lower Pace in October

The cost of living probably grew in October at the slowest pace in three months, showing U.S. inflation is in check, economists said before a report today.

The projected 0.1 percent gain in the consumer-price index follows a 0.6 percent increase the prior month, according to the median estimate of 83 economists surveyed by Bloomberg. Other reports may show jobless claims climbed as a result of superstorm Sandy, while regional manufacturing decelerated.

Macy’s Inc. (M) is among retailers planning holiday discounts, while Amazon.com Inc. (AMZN) and Wal-Mart Stores Inc. (WMT) are battling to offer the best online prices on toys, indicating companies have little leeway to charge more. The inflation outlook is in sync with the Federal Reserve’s view and gives policy makers room to concentrate on boosting growth.

“There isn’t much pricing power,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “Inflation is a second-tier concern for the Fed right now. Growth is by far their biggest focus.”

The Labor Department will release the consumer price figures at 8:30 a.m. today in Washington. Economists’ estimates ranged from a drop of 0.1 percent to an increase of 0.3 percent.

Also at 8:30 a.m., the Labor Department may report claims for unemployment benefits jumped to 375,000 last week from 355,000 in the prior period, according to the Bloomberg survey median, as workers who lost their jobs as a result of the storm that paralyzed parts of the Northeast begin to file. A Labor Department spokesman last week said it may take three to four weeks to see the full impact.

Regional Manufacturing

Regional data on manufacturing, a mainstay of the economic expansion, may reflect concern about the impending fiscal tightening that’s led businesses to limit investment.

The Federal Reserve Bank of New York’s so-called Empire State index, covering New York, northern New Jersey and southern Connecticut, dropped to minus 8 in November from minus 6.2 the prior month, Bloomberg survey median showed. Readings less than zero signal contraction. The report is also due at 8:30 a.m.

The Federal Reserve Bank of Philadelphia’s gauge, to be released at 10 a.m., may decrease to 2 this month from 5.7 in October, signaling a slower pace of expansion.

Today’s price report may also show the so-called core CPI measure, which excludes volatile food and energy costs, increased 0.1 percent in October for the fourth consecutive month, economists predicted.

Retailer Discounts

Macy’s, the second-largest U.S. department-store chain, posted third-quarter profit that topped analysts’ estimates while its forecast for the end of the year signaled it may use heavy discounts to draw holiday shoppers.

Amazon.com has cheaper online prices for toys than Wal- Mart, Target Corp. and other major chains as parents begin shopping for the holidays, according to a Bloomberg Industries analysis. In a comparison of 125 randomly selected toys conducted Nov. 8, Amazon had lower prices than Wal-Mart on 44 percent of the items, while Wal-Mart had the advantage on 13 percent.

Limited price pressures give policy makers room to maintain a third round of unprecedented bond-buying aimed at spurring the expansion and reducing unemployment. Longer-term inflation expectations have “remained stable,” the Federal Open Market Committee said in an Oct. 24 statement after its meeting.

“The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective,” the Fed officials said.

Cheaper Fuel

Cheaper fuel costs may keep limiting the cost of living for Americans this month. A gallon of regular gasoline at the pump has averaged $3.46 so far in November, down 41 cents from a five-month high of $3.87 reached on Sept. 13, according to AAA, the biggest U.S. motoring group.

The consumer price index is the broadest of three monthly inflation gauges reported by the Labor Department. Producer prices, released yesterday, unexpectedly fell in October for the first time in five months as energy and vehicle costs dropped. The 0.2 percent decline followed a 1.1 percent increase the prior month.

Import prices unexpectedly climbed in October, led by increases in energy expenses that have since been reversed. The 0.5 percent advance followed a 1.1 percent gain in September and a 1.2 percent rise in August, figures showed last week.

                 Bloomberg Survey

====================================================
                           Initial      CPI     Core
                            Claims               CPI
                            ,000’s     MOM%     MOM%
====================================================
Date of Release              11/15    11/15    11/15
Observation Period          10-Nov     Oct.     Oct.
----------------------------------------------------
Median                         375     0.1%     0.1%
Average                        377     0.1%     0.1%
High Forecast                  475     0.3%     0.3%
Low Forecast                   340    -0.1%     0.0%
Number of Participants          49       83       81
Previous                       355     0.6%     0.1%
----------------------------------------------------
4CAST                          380     0.1%     0.2%
ABN Amro                       365     0.1%     0.2%
Acciones y Valores            ---      0.3%     ---
Action Economics               353     0.3%     0.2%
Aletti Gestielle              ---      0.1%     0.1%
Ameriprise Financial           385     0.1%     0.2%
Banca Aletti                   380     0.1%     0.1%
Bank of the West              ---      0.2%     0.2%
Bank of Tokyo-Mitsubishi       380     0.0%     0.2%
Banorte-IXE                   ---      0.2%     0.1%
Barclays                       375     0.1%     0.2%
Bayerische Landesbank         ---      0.1%     0.1%
BBVA                           365     0.2%     0.1%
BMO Capital Markets            370     0.1%     0.1%
BNP Paribas                    340     0.1%     0.2%
BofA Merrill Lynch             385     0.1%     0.1%
Briefing.com                   475     0.0%     0.1%
Capital Economics             ---      0.1%     0.1%
CIBC World Markets            ---      0.1%     0.2%
Citi                           355     0.1%     0.2%
ClearView Economics           ---      0.1%     0.1%
Commerzbank AG                 370     0.1%     0.1%
Credit Agricole CIB           ---      0.1%     0.1%
Credit Suisse                  380     0.1%     0.1%
Danske Bank A/S               ---      0.3%     0.1%
DekaBank                      ---      0.1%     0.1%
Desjardins Group               385     0.0%     0.2%
Deutsche Bank Securities       375     0.1%     0.2%
Deutsche Postbank AG          ---     -0.1%     0.1%
Exane                         ---      0.1%     0.1%
First Trust Advisors           380     0.1%     0.1%
FTN Financial                 ---      0.1%     0.1%
Goldman, Sachs & Co.          ---      0.1%     0.1%
Hammer Partners SA            ---      0.1%     0.1%
Helaba                         365     0.2%     0.2%
High Frequency Economics       385     0.1%     0.1%
HSBC Markets                   370     0.0%     0.2%
Hugh Johnson Advisors          375     0.0%     0.1%
IDEAglobal                     415     0.3%     0.1%
IHS Global Insight             370     0.1%     0.1%
Informa Global Markets        ---      0.0%     0.1%
ING Financial Markets         ---      0.1%     0.1%
Insight Economics              390     0.0%     0.1%
Intesa Sanpaulo               ---      0.1%     0.1%
J.P. Morgan Chase              380     0.1%     0.2%
Janney Montgomery Scott       ---      0.2%     0.1%
Jefferies & Co.                385     0.1%     0.1%
John Hancock Financial         367     0.1%     0.1%
Landesbank Berlin              365    -0.1%     0.0%
Landesbank BW                 ---      0.2%     0.1%
Lloyds Bank                    350     0.0%     0.1%
Maria Fiorini Ramirez          375     0.1%     0.1%
Market Securities             ---      0.1%     0.2%
MET Capital Advisors          ---      0.0%     ---
Moody’s Analytics              368     0.0%     0.1%
Morgan Stanley & Co.           395     0.1%     0.1%
National Bank Financial       ---      0.1%     0.2%
Natixis                       ---      0.1%     0.1%
Nomura Securities             ---      0.2%     0.1%
Nord/LB                        375     0.1%     0.1%
OSK Group/DMG                 ---      0.1%     0.2%
Oxford Economics               410     0.1%     0.1%
Pierpont Securities            380     0.1%     0.1%
PNC Bank                      ---      0.1%     0.1%
Prestige Economics            ---      0.1%     0.1%
Raiffeisenbank International  ---      0.1%     0.1%
Raymond James                  375     0.1%     0.1%
RBC Capital Markets            370     0.1%     0.1%
RBS Securities                 370     0.1%     0.1%
Regions Financial             ---      0.1%     0.1%
Scotiabank                     375     0.1%     0.1%
SMBC Nikko Securities         ---      0.1%     0.1%
Societe Generale               380     0.2%     0.2%
Southern Polytechnic State     383     0.1%     0.3%
Standard Chartered             365    -0.1%     0.2%
Stone & McCarthy               370     0.1%     0.1%
TD Securities                  375     0.1%     0.2%
UBS                            375     0.1%     0.2%
Union Investment              ---      0.1%     0.2%
University of Maryland         370     0.1%     0.2%
Wells Fargo & Co.             ---      0.1%     0.2%
Westpac Banking Co.            370     0.0%     0.1%
Wrightson ICAP                 400     0.0%     0.1%
====================================================

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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

4:32

Nov. 14 (Bloomberg) – Richard Clarida, global strategic adviser at Pacific Investment Management Co., talks about the outlook for financial markets, investment strategy and Federal Reserve monetary policy. Clarida speaks with Adam Johnson and Alix Steel on Bloomberg Television's "Street Smart." (Source: Bloomberg)