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Economy in Brief

Consumer Prices Boosted by Energy, Core Tame
by Tom Moeller February 20, 2004

The Consumer Price Index (CPI-U) rose 0.5% in January versus the Consensus expectation for a 0.3% gain. Less food & energy prices rose 0.2%, slightly firmer than the 0.1% Consensus expectation.

Rising energy prices were the source of the upside surprise last month as they jumped 4.7%. Gasoline prices spiked 8.1% (+8.3% y/y) following three months of flat to lower prices. Fuel oil prices also were strong, up 6.8% (9.7% y/y).

Prices of core consumer goods were unchanged following more than a year of deflation. Much of that "firming" came as prices for household furnishings & operation rose 0.4% (-1.6% y/y), only the second monthly increase since February. Apparel prices fell another 0.3% (-1.8% y/y) and new & used motor vehicle prices edged 0.1% lower (-4.0% y/y).

Core services prices were again tame, rising just 0.2%. Shelter prices ticked up only 0.1% (2.0% y/y) and medical care services price inflation eased to 0.3% (4.3% y/y). Public transportation prices rose for the first month in three by 0.2% (2.0% y/y).

The chained CPI which adjusts for shifts in consumer buying behavior rose (0.5%) for the first month since September. It is similar to the PCE price deflator. The core price measure also rose (0.2%) for just the first month in three.

A working paper from the Federal Reserve Bank of Kansas City titled "Disaggregate evidence on the persistence of consumer price inflation" can be viewed here.

Consumer Price Index Jan Dec Y/Y 2003 2002 2001
Total  0.5% 0.2% 2.0% 2.3% 1.6% 2.8%
 Total less Food & Energy 0.2% 0.1% 1.1% 1.5% 2.3% 2.7%
  Goods less Food & Energy 0.0% -0.1% -2.2% -2.0% -1.1% 0.3%
  Services less Energy 0.2% 0.2% 2.5% 2.9% 3.8% 3.7%
 Energy 4.7% 0.3% 7.7% 12.2% -5.8% 3.7%
 Food & Beverages 0.0% 0.5% 3.6% 2.1% 1.8% 3.1%
             
Chained CPI: Total (NSA) 0.5% -0.2% 1.6% 1.9% 1.3% 2.3%
 Total less Food & Energy 0.2% -0.3% 0.8% 1.1% 1.9%  2.0%
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