Inflation Running Too Low, QE to Continue

Headline inflation fell by 0.1% in October, and the core reading after excluding food and energy rose by 0.1%. The big drop is a 1.7% decline in energy prices. Gasoline prices were down almost 3%, and the theory that the cost of energy equals inflation is getting easier to make.

Overall inflation was up 1.0% versus the prior year. This marked the lowest overall reading in more than three years, and this is well below the annualized Federal Reserve inflation target of 2%. What makes this report tricky to care too much about is that it was pretty much in-line with economist surveys.

The easing debate will continue. And continue …