Inflation Takes a Breather

Upward pressure on the Consumer Price Index (CPI) from a few component prices reversed in October, and the 12-month growth rate in the index slowed from 3.9 percent to 3.5 percent, edging down for the first time since last November. This reversal came as a dip in energy prices (led by a 31.6 percent decrease in motor fuel) more than offset a modest 1.4 percent increase in food prices. However, October’s increase in food prices—which was the smallest of the year—was due in large part to a fairly sizeable 28 percent decrease in fresh fruit and vegetable prices. Most of the other food categories were in the upper tail of the price-change distribution (posting increases above 5 percent).