Thursday, October 31, 2013

September CPI falls to three-year low for West region

The Bureau of Labor Statistics released this week the September CPI for US urban areas and regions. In the West region, from September 2012 to September 2013, the CPI increased 1.3 percent, and was down from August 2013's year-over-year change of 1.54.

In the first graph, we see that the year-over-year change in  for the West CPI was down from September 2012's change of 2.2 percent, and was well down from 2008's pre-recession annual change of 4.3 percent.

Looking at each month for the past decade, we find that the year-over-year change in CPI is now near the lowest it's been since 2010. Only April and May of this year showed lower year-over-year changes in CPI with increases of 1.25 in both months.

Among the components of CPI, the largest year over year increases were found in housing (2.8 percent) and medical care (1.5 percent).

The downward trend in CPI suggests continued weakness in the economy as wages show little overall growth. The Fed's repeated reluctance to taper quantitative easing shows a lack of confidence on the part of the fed that the economy would continue to recover without continued easing on the part of the Fed.