US CPI inflation was an annual 1.2% in October while the "core" rate – excluding food and energy – fell to just 0.6%. These figures have reinforced perceptions that inflation is lower in the US than in other major economies and that pressures are continuing to weaken.

As previously discussed, however, the US numbers are lowered by the inclusion of imputed housing rents, which are estimated to have been unchanged over the last year. If recalculated using the EU's HICP methodology, US CPI inflation was 1.8% in September (the latest available month for this measure) – the same as in the Eurozone.

Rents have risen slightly in recent months, probably in response to a fall in rental vacancy rates – see first chart. The drag effect on the published inflation numbers, therefore, could lessen.

The "core" rate has been driven lower recently by goods price weakness – services inflation has been stable. Producer price inflation for core consumer goods, however, has been firming and normally leads the CPI measure. The PPI pick-up, meanwhile, partly reflects a rise in import prices, including from China – second chart.

The bottom line is that inflationary trends are not significantly different from those in other countries and do not warrant the Federal Reserve's decision to implement further unilateral monetary easing – especially with money supply growth accelerating and fiscal policy less restrictive than elsewhere.