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The Consumer Price Index for All Urban Consumers was flat in November. The index climbed for most of the year, before decreasing slightly in October. A decrease in the energy index , driven by lower gasoline costs, countered rises in the other indexes (the food index and the all items less food and energy index ). climbing 3.5% (seasonally adjusted) over the last year, the CPI decreased 0.1%. The key factor was energy costs. From the Bureau of Labor Statistics release: The energy index declined for the second month in a row and offset increases in the indexes for food and all items less food and energy. As in October, the gasoline index fell sharply and the index for household energy declined as well. The food index rose slightly in November, though the index for food at home declined as four of the six major grocery store food group indexes fell. The index for all items less food and energy increased 0.2 percent in November following increases of 0.1 percent in each of the prior two months. The indexes for shelter, medical care, apparel, and personal care all rose. These increases more than offset declines in the indexes for new vehicles and used cars and trucks. The all items index has risen 3.4 percent over the last 12 months. This is a slightly smaller increase than last month’s 3.5 percent figure, as the 12-month change in the energy index declined from 14.2 percent to 12.4 percent. The 12-month change in the food index also declined slightly, from 4.7 percent to 4.6 percent. In contrast, the 12-month change in the index for all items less food and energy continued to rise, reaching 2.2 percent in November. Here's a look at the CPI for All Urban Consumers over the last year: Read the release here .

The Bureau of Labor Statistics released Producer Price Index data yesterday, and the year over year numbers show a rise in the price of finished goods that we have not seen since September of 2008. The monthly increase during the month of March was 0.7%. The PPI for intermediate goods showed a similar pattern. Here's a look at the finished goods data. First, the monthly percent change, seasonally adjusted: And the 12-month percent changes (this is not seasonally adjusted): So does this data mean it is time to consider inflation again? Mark Thoma says no. In his latest Money Watch column, Thoma argues that the "pass through from producer prices to consumer prices is less than 100 percent in any case, and in some cases it is close to zero," and he gives an interesting lesson in why we should look at "core inflation": First, core inflation is used to forecast future inflation. For example, this recent paper uses a “bivariate integrated moving average … model … that fits the data on inflation very well,” and finds that the long-run trend rate of inflation “is best gauged by focusing solely on prices excluding food and energy prices.” That is, this paper finds that predictions of future inflation based upon core measures are more accurate than predictions based upon total inflation. Second, we also use the core inflation rate to measure the current underlying trend in the inflation rate. Because the inflation rate we observe contains both permanent and transitory components, the precise long-run inflation rate that consumers face going forward is not observed directly, it must be estimated. When food and energy are removed to obtain a core measure, the idea is to strip away the short-run movements thereby giving a better picture of the core or long-run inflation rate faced by households. (I should note, however that this is not the only or even the best way to extract the trend, and the Fed also looks at other measures of the trend inflation rate that have better statistical properties, e.g. “trimmed mean” measures. Also, the first use of core inflation described above is for forecasting future inflation rates, the second attempts to find today’s trend inflation rate. There is a way to combine the first and second uses into a single conceptual framework, but it seemed more intuitive to keep them separate.) Let me emphasize one thing. If the question is “what is today’s inflation rate,” the total inflation rate is the best measure. It’s intended to measure the cost of living and there’s no reason at all to strip anything out. It’s only when we ask different questions such as what the inflation rate will be in the future — essential knowledge for policymakers due to lags between the implementation of policy and its effects — that different measures are used. Third, and this is the function that is ignored most often in discussions of core inflation, but to me it is the most important of the three, it is the inflation target that best stabilizes the economy (i.e. best reduces the variation in output and employment). Read Thoma's column here . For the BLS data on producer prices, click here .

The Consumer Price Index rose 0.9% in June. The seasonally adjusted rate of growth was 0.7%. The rise in energy prices seems to be a key factor, as the gasoline index rose 17.3 % in the month, according to the Bureau of Labor Statistics , but it was not the only index that turned up. Food reversed price declines from May, and the housing index held steady after three months of decline. The year to-date trends look strong overall: The CPI-U all items index advanced at a seasonally adjusted annualized rate (SAAR) of 3.3 percent in the second quarter of 2009 after increasing at a 2.2 percent rate in the first quarter. This brings the year-to-date SAAR to 2.7 percent and compares with a 0.1 percent increase in all of 2008. The index for energy, which fell 21.3 percent during 2008, rose at a 14.8 percent SAAR in the first six months of 2009. Energy commodities increased at a 52.1 percent rate in the first half of the year, while energy services declined at a 13.6 percent rate. The index for food declined at a 1.1 percent SAAR in the first six months of 2009 after rising 5.9 percent in all of 2008. The food at home index declined at a 3.8 percent rate during the first half of 2009 after rising 6.6 percent in 2008. Read the BLS report here .