Falling Wireless-Phone Prices Drag Down U.S. Inflation, Again

(Bloomberg) -- Better deals for U.S. mobile-phone users are keeping a lid on a key gauge of inflation -- again.

The core consumer price index, which excludes volatile food and energy costs, rose 0.2 percent in November from the prior month, or 0.209 percent when taken to three decimal places, according to a Labor Department report Wednesday.

That pace would have been faster if not for a 2.2 percent monthly drop for wireless-service prices, the steepest since March 2017 -- when there was a record 7 percent decline as carriers sweetened data packages. That depressed annual inflation figures for a year.

Excluding last month’s big drop for wireless-service prices, the core CPI gauge would have risen by 0.257 percent, according to Bureau of Labor Statistics economist Steve Reed. That rounds up to 0.3 percent, which would have exceeded the median estimate of analysts for a 0.2 percent increase.

Falling Wireless-Phone Prices Drag Down U.S. Inflation, Again

Service prices have been falling since early last year, when the four major U.S. carriers moved to unlimited data plans, said Roger Entner, an analyst with Recon Analytics LLC. As people stream more shows and games on phones, data use rises but prices hold steady, effectively cutting costs, he said.

Adjustments based on the quality of phone plans “were an important factor” in the November decline in wireless-service prices, Reed said.

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