Core Inflation Biggest Drop in 13 Yrs; Retail Sales Declined 0.2%; Inventories Rose 0.4%
Retail trade sales were down 0.3% from September, but were 4.2% above last year. Motor vehicles and parts dealers were up 10.1% from October 2005 and sales of nonstore retailers were up 8.6% from last year.
Wholesale Inflation (PPI, core PPI):
Inflation at the wholesale level (Producer Price Index) fell 1.6% in October, matching the record decline set in October 2001, reported the Bureau of Labor Statistics of the U.S. Department of Labor. This decrease followed a 1.3% decline in September, led by big declines in the price of gasoline and new cars.
Core inflation (core PPI), which excludes energy and food, dropped by 0.9%, the biggest one-month fall in 13 years, reflecting big declines in prices for new cars and sport utility vehicles. This drop is a big welcome, following a 0.6% spike in September. Excluding new car prices, core inflation would have risen by a modest 0.1% in October.
- Energy prices dropped by 5% last month following an 8.4% fall in September.
- Gasoline prices were down 7.9% last month while natural gas fell by a record 9.3%.
- Food costs were down 0.8% in October
- Computer prices fell by 3.1%, the biggest drop since June.
The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers' shipments for September was estimated at $1,050.8 billion, down 2.0% from August and up 4.9% from September 2005.
Sales at auto dealers rose by 0.6% in October after a 0.7% increase in September. But sales at department stores fell by 0.3% while sales at specialty clothing stores managed only a tiny 0.1% increase.
Manufacturers' and trade inventories were estimated at an end-of-month level of $1,362.6 billion, up 0.4% from August and up 7.6% from September 2005.
The total business inventories/sales ratio based on seasonally adjusted data at the end of September was 1.30. The September 2005 ratio was 1.26.