Inflation Still in Check as Housing Offsets Energy

Housing slump offsets energy rise to keep CPI down
By Kevin Spak,  Newser Staff
Posted Nov 15, 2007 9:43 AM CST
A sign stands in front of a new home that sits unsold on the market in southeast Denver on Tuesday, Oct. 16, 2007. Problems in the housing industry intensified last month with construction of new homes...   (Associated Press)
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(Newser) – Consumer prices saw only modest gains last month, welcome news for inflation watchers with an eye on rising oil prices and a dropping dollar. The Consumer Price Index rose 0.3%, in lockstep with analysts' estimates. Core CPI, which excludes food and energy, rose 0.2%. Year-over-year, the increases were 3.5% and 2.2% respectively, with the latter just above the Fed’s presumed 1%-2% comfort zone, the Wall Street Journal reports.

The Fed traditionally gauges inflation by core CPI, but this week Ben Bernanke said he’d be watching both numbers. “There are no alarm bells going off today,” one economist concluded, “but neither does it provide any wiggle room to cut rates.” Energy prices were up 1.4% from September, but that was offset by housing, which rose just 0.2%.