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November Consumer Prices Drop Largest in Over 50 Years

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November Consumer Prices Drop Largest in Over 50 Years

Old 12-15-05, 09:14 AM
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November Consumer Prices Drop Largest in Over 50 Years

Fox News:

WASHINGTON U.S. consumer prices fell 0.6 percent in November, the largest decline in 56 years, as energy prices posted a record 8.0 percent drop in the month, the government said on Thursday.

The slide in prices was slightly larger than the 0.4 percent reversal expected by Wall Street and was the biggest decrease in prices since July 1949.

Excluding food and energy costs, so-called core inflation rose 0.2 percent in November, in line with market forecasts.

Over the past year, consumer prices have climbed 3.5 percent, a slowdown from October's 4.3 percent inflation rate but still above the 12-month increase in average weekly earnings - meaning consumer budgets are not keeping pace with rising prices.

Core inflation on a year-on-year basis remained at a relatively tame 2.1 percent in November.

The decline in prices in November was driven by sharp decreases in energy costs following a hurricane-related spike in the fall. Gasoline prices dropped 16.0 percent, the largest monthly decline according to records dating back to 1967, while fuel oil costs fell 6.1 percent and natural gas prices fell 0.5 percent.

Electricity prices rose, however, by 3.8 percent - the largest increase in records dating back to 1952.

Other costs also rose in November. Food prices rose 0.3 percent, service costs climbed 0.5 percent and medical care costs surged 0.6 percent. Housing costs, which include both shelter at home and lodging away from home, increased 0.5 percent in the month and were up 4.0 percent from a year earlier.


In a separate report, the Labor Department said real average weekly earnings rose 0.6 percent in November after a 0.5 percent gain the prior month - reversing a long string of declines. Average weekly earnings have risen 3.2 percent from November 2004 but since inflation has risen even faster, real earnings remain 0.4 percent lower than a year earlier.
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Rather misleading headline, wouldn't you say?

See what energy prices do this month.
Old 12-15-05, 09:36 AM
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Originally Posted by classicman2
Rather misleading headline, wouldn't you say?
"U.S. consumer prices fell 0.6 percent in November, the largest decline in 56 years" Not really... atleast no more than any other headline out there IMHO.
Old 12-15-05, 09:41 AM
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It's not reflective for the cost of living because everthing else rose.

I'm anxious to see how the report for December will read - whether the Fox headlines will be reflective of the one-month consumer energy price.
Old 12-15-05, 09:48 AM
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Seems Reuters has the same sort of headline... maybe you're on to a new VRWC

http://news.yahoo.com/s/nm/20051215/...NlYwN5bmNhdA--
Consumer prices fall on record energy drop

By Andrea Hopkins 37 minutes ago

WASHINGTON (Reuters) - U.S. consumer prices fell 0.6 percent in November, the largest decline in 56 years, as energy prices posted a record 8.0 percent drop, the government said on Thursday in a report that eased inflation concerns.
....
[story continues pretty much along the same lines as the OP, news on jobless claims (which went up) is also included though]
Old 12-15-05, 10:00 AM
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So the driving factor for the huge drop in prices was the return to normalcy of gas prices from their absurd levels over the summer? That makes sense, but I would guess that prices were spiked pretty badly by the rise in gas prices over the summer, so I don't know how earth shattering this news is.
Old 12-15-05, 10:07 AM
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Gasoline prices rose again with the price of crude oil at about $61 per barrel.
Old 12-15-05, 10:14 AM
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Originally Posted by classicman2
Gasoline prices rose again with the price of crude oil at about $61 per barrel.
I wonder if you are going to be as critical of this headline

http://www.truckinginfo.com/news/new...?news_id=55886

AAA: Gas Prices Back Above $2 Per Gallon in 49 States

12/15/2005
After weeks of declining gas prices, Americans are again paying more at the pump with retailers charging an average of more than $2 per gallon in all but one state, AAA said Tuesday.
The nationwide average price of self-serve regular gasoline had dropped to a season low of $2.122 per gallon on Dec. 4, according to AAA's daily, online Fuel Gauge Report (www.aaafuelgaugereport.com), before reversing course and rising 5.8 cents to $2.18 per gallon as of today.
Energy demand created by cold winter temperatures and the approaching holidays were cited by AAA as primary reasons for the higher prices.
Today's nationwide average price compares to an average price of $1.866 per gallon recorded one year ago, the nation's largest travel organization said.
The highest statewide average price is in Hawaii at $2.64 per gallon. Motorists in Alaska are paying the next highest price at $2.503 per gallon. New Yorkers are paying an average $2.36 per gallon; the third highest state average price.
The lowest statewide average gasoline prices in the nation are in Utah at $1.998 per gallon, followed by South Carolina at $2.055 per gallon.
<b> Nationwide, the price of self-serve, mid-grade gasoline averages $2.315 per gallon, <u>a decrease from $2.461 per gallon in the middle of last month</u>, and up from $1.981 one year ago. <u>Self-serve premium averages $2.398 per gallon, down from $2.558 per gallon one month ago</u> and up from $2.054 one year ago.</b>
The national average prices for self-serve regular unleaded gasoline for AAA's mid-November survey for the last five years are: 2004, $1.866; 2003, $1.471; 2002, $1.378; 2001, $1.115; and 2000, $1.496.
AAA's Fuel Gauge Report is based on data from Oil Price Information Service, the nation's most comprehensive source of petroleum pricing information.
AAA purchases the data and makes it available free on the Internet as a public service. Average daily prices for the nation, all 50 states and more than 250 localities are available for all grades of gasoline, making the site the most current and complete public source of fuel price information.
Old 12-15-05, 10:19 AM
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With soaring energy prices in December, one wonders if the administration will return to the 'old way' of figuring consumer cost.
Old 12-15-05, 10:29 AM
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Originally Posted by classicman2
With soaring energy prices in December, one wonders if the administration will return to the 'old way' of figuring consumer cost.


Of course there's no telling what's going to happen throughout the month but these are hardly indicators what I call "soaring energy prices".

http://www.marketwatch.com/news/stor...ss&siteid=mktw
NEW YORK (MarketWatch) -- Natural gas futures extended their sharp decline from record highs in early electronic trading Thursday, ahead of a weekly government report on inventories.

The January futures contract was shedding 48 cents, or 3.3%, to $14.199 per million British thermal units.

The front-month contract had tumbled 69.9 cents, or 4.5%, to $14.679 on Wednesday, after reaching a record high of $15.780 in intraday trading on Tuesday.

The declines come despite expectations that the Energy Department will report later Thursday a sizable drawdown in U.S. natural-gas inventories. Estimates, which average 171 billion cubic feet, range from 105 billion cubic feet to 200 billion cubic feet.
...


http://news.yahoo.com/s/afp/20051215...e_051215115843
LONDON (AFP) - World oil prices fell after the US
Department of Energy posted a rise in crude stockpiles, dealers said.

New York's main contract, light sweet crude for delivery in January, slipped 47 cents Thursday to 60.38 dollars per barrel in electronic trading.

In London, the price of Brent North Sea crude for January delivery shed 27 cents to 59.33 dollars per barrel.
...
Old 12-15-05, 10:40 AM
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If you use natural gas to heat your home - check your December bill.
Old 12-15-05, 11:13 AM
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I was watching CNBC when the numbers came out. One of the anchors gives some good commentary on these. They also had an interview from some analyst. The consensus is that the numbers are good, but for the near future inflation is still going to run above the Fed's range and more interest rate hikes are most likely in store above the 5% rate that is predicted by the middle of next year.
Old 12-15-05, 11:15 AM
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Originally Posted by classicman2
...
Rather misleading headline, wouldn't you say?
...

Looks more like misleading bolding to me!
Old 12-15-05, 11:15 AM
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The 'number' is good - not numbers.
Old 12-15-05, 11:22 AM
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Originally Posted by classicman2
If you use natural gas to heat your home - check your December bill.
Seriously, although I use electric and don't have to use heat too much, being a palm tree state. Jebby today was talking about using less natural gas and wanting more bio diesel in Florida.
Old 12-15-05, 11:28 AM
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My last natural gas bill showed an increase of about 40% over the same period last year. I calculated the usage in arriving at the figure.

And I live in a natural gas producing state. Of course, some is added to my bill to help those living in Ohio with their natural gas bill.
Old 12-15-05, 12:31 PM
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Originally Posted by classicman2
If you use natural gas to heat your home - check your December bill.
I dread the arrival of the Dec. gas bill - I'm expecting something on the order of $225-250
Old 12-20-05, 11:38 AM
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Just another update/some more news to add to the discussion...

http://news.yahoo.com/s/ap/20051220/...kxBHNlYwN0bQ--

WASHINGTON - Inflation at the wholesale level fell in November by the largest amount in 2 1/2 years, reflecting big declines in gasoline and other energy products. The declines were expected to be short-lived, however, given that energy prices are on the rise again.

The Labor Department reported Tuesday that wholesale prices dropped by 0.7 percent last month, the biggest decline since a 1.5 percent plunge in April 2003. The drop reflected a sizable 4 percent fall in energy prices, which came after four months of sizable gains related to higher global oil prices and hurricanes Katrina and Rita, which caused widespread shutdowns of oil wells and refineries along the Gulf Coast.

The big drop in wholesale prices in November mirrored a similar 0.6 percent fall in consumer prices, the biggest drop in 56 years. But analysts cautioned that the good news on inflation may not last with gasoline prices rising again and Americans facing substantial increases in home heating costs compared to a year ago.

In other economic news, construction of new homes and apartments rose by 5.2 percent in November to a seasonally adjusted annual rate of 2.123 million units. Applications for building permits were also up 2.5 percent to an annual rate of 2.155 million units.

While the November increase in housing construction was the biggest since April, analysts are still expecting activity to slow in the months ahead as buyers react to continued increases in home mortgage rates.

For November, housing was strong in all parts of the country except the South, which saw a 1.3 percent drop in housing starts. Construction activity rose by 12.3 percent in the Midwest, 11 percent in the Northeast and 11.5 percent in the West.

The government's
Producer Price Index measures inflation pressures before they reach the consumer. The November reading showed that the 4 percent drop in energy prices was the biggest one-month decline since 7.2 percent fall in April 2003, a time when prices were retreating after America's initial successes in the
Iraq war.

Last month, gasoline prices dropped 10.7 percent while home heating oil was down by 15.5 percent and natural gas prices were down 0.5 percent. However, pump prices rose last week after a string of declines and home owners are braced for significant increases in heating costs this winter compared to a year ago.

Food prices were up 0.5 percent in November after having fallen by 0.1 percent in October. More than half of last month's increase came from a 13.4 percent jump in egg prices. Citrus prices rose by 35.2 percent, the biggest jump in almost seven years.

Excluding energy and food, the so-called core rate of inflation at the wholesale level showed a small increase of 0.1 percent last month after a decline of 0.3 percent in October.

Wholesale prices over the past 12 months have risen by 4.4 percent, reflecting the jump in energy prices this year. Excluding food and energy, wholesale prices are up a more moderate 1.7 percent over the past 12 months.

The
Federal Reserve earlier this month boosted a key interest rate for a 13th time but indicated that the rate hikes could be drawing to a close.

Many economists are looking for two more quarter-point moves in January, which will be
Alan Greenspan's last meeting, and in March, which will be the first meeting for Ben Bernanke, who has been tapped to succeed Greenspan.

Despite the recent good news on inflation, some economists worry that the Fed will be forced to raise rates higher than currently expected if the jump in energy costs begins to spill over into more widespread inflation problems.
Old 12-21-05, 03:20 PM
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Originally Posted by Illinois Enema Bandit
I dread the arrival of the Dec. gas bill - I'm expecting something on the order of $225-250

Mine just came in at 551.80. The funny thing is I was 'relieved'; I was completely expecting something in the 700 range.
Old 12-21-05, 04:20 PM
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Just wait until Spring, Summer, and Fall for gas prices. We'll probably see 3.50/gallon, and then by winter of next year, we'll see another report saying, "Prices of gas have fallen by 20% and are now the lowest since 2005! Rejoice! Spend! Drive!"

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