Consumer inflation edged higher in October and was the largest gain since March, fueled by higher gas prices. The Consumer Price Index (CPI) rose 0.4% versus the 0.3% expected while the year-over-year number saw a 1.8% increase from 1.7% in September. Core CPI rose 0.2%, in line with estimates, while the year-over-year number was up 2.3% from a gain of 2.4% in September. Core PCE, the Fed's favorite inflation gauge, is running at 1.7% annually, just below the Fed's target of 2%. Inflation is low and as the Fed has been saying, it will remain subdued for quite some time.
Mortgage rates rose in the latest week and remain at historic lows. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage rose five basis points to 4.03% for the week ending November 13, 2019. That rate carries a 0.31 in points. Despite the increase in rates, the Purchase Index rose 5.1% while the Refinance Index increased 12.9%. The Market Composite Index, a measure of total mortgage application volume, rose 9.6%. The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.
The National Retail Federation reports that consumers are expected to spend 4% more this holiday shopping season than in 2018. The average consumer says they will spend an average of $1,047.83 this season, up from $1,007.24 last year. Shoppers between the ages of 35 and 44 plan to spend the most at $1,158.63. Total consumer spending in this holiday shopping season is expected to be between $727.9 billion and $730.7 billion. “Consumers are in good financial shape and willing to spend a little more on gifts for the special people in their lives this holiday season,” NRF President and CEO Matthew Shay said.