December 16, 2011 / 2:15 PM / 8 years ago

Instant view: Consumer prices flat in November

NEW YORK (Reuters) - Consumer prices were flat in November as Americans paid less for cars and gasoline, while the 12-month inflation reading fell for the second straight month, which could give the Federal Reserve more room to help a still-weak economy.

COMMENTS:

JACOB OUBINA, SENIOR US ECONOMIST, RBC CAPITAL MARKETS, NEW YORK

“It was obviously softer than the market was expecting. We were actually surprised we didn’t see even more weakness given the heavy round of discounting during the initial holiday shopping session, Black Friday.

“Inflation is probably at the point where it’s cresting right now on a year on year basis. It will remain sticky around 2 percent for the first half of next year and then tick down to 1.8 percent. I think the Fed would very happy with that.”

JIM PAULSEN, CHIEF INVESTMENT OFFICER, WELLS CAPITAL MANAGEMENT

“CPI not a big report today because what came out was basically what was expected: an overall deceleration in the numbers.

“Long term it is significant because the big thing that hurt the consumer this year was an acceleration in inflation. That caused real incomes to decline and purchasing power got hit.

“Next year the consumer is going to get a boost and that’s one of the reasons you’re seeing a better consumer (confidence) of late.”

JEREMY LAWSON, SENIOR ECONOMIST, BNP PARIBAS, NEW YORK

“We’ve had moderation in headline inflation since the beginning of year. That’s largely a commodity story.

“However, core inflation is a reminder is a bit more persistent than what some people had expected. The core will likely stay at this 2.2 percent year-over-year level until the spring and then we expect it to decline from there. It’s a steady as she goes story.

“This is not a surprise to the Fed. The Fed will stay focused on the economy. The communication policy will be place in January and inflation will be part of that story.”

OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE, WASHINGTON

“The data was more or less a non-event. We had relatively flat consumer prices and in fact, year-over-year, we saw a slight decline in the headline CPI. I think inflation for the most part is really not a large concern for investors and this data is likely to take a back seat to continued focus on euro-centric issues.

“Overnight, we saw a little bit of a rebound in the euro, basically some profit-taking and positioning ahead of the weekend. But ultimately, I think the story is a negative one for the euro and that will continue to play itself out over the week ahead.”

IAN LYNGEN, GOVERNMENT BOND STRATEGIST, CRT CAPITAL GROUP, STAMFORD, CONNECTICUT:

“Overall, a relative non-event of an inflation report that leaves the Fed ample cover for any additional monetary policy accommodation they may see warranted in the New Year. Treasuries were trading slightly lower ahead of the release and since the data firmed, but are largely unchanged versus Thursday’s close.”

MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BNY MELLON, NEW YORK

“If you look at the headline number, you’ll see it’s been undermined over the last two months by a significant drop in energy prices. But this decline is not sustainable. Oil prices are back around $100 a barrel now, so it suggests we’re likely to see a rebound. More troubling is the persistent rise in core inflation, which surprised to the upside. We’ve been ignoring headline inflation because of the volatility of food and energy prices, but if they remain high, they will drag core higher.”

VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS “Consumer prices were flat in November, as the anticipated pull from falling gasoline prices (as well as other energy commodities) offset rising prices in food and beverage products and nearly every core item. Prices had just fallen 0.1% in October, equally influenced by decreases in the energy index. While headline CPI just missed expectations (up 0.1%), core prices, up 0.2% in November, nudged past consensus of a gain of 0.1%. Before rounding, the CPI fell 0.019% and core rose by 0.173%, showing the extent of relief at gas stations.”

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