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Economy in Brief

Consumer Price Inflation Under Wraps
by Tom Moeller September 16, 2004

The Consumer Price Index (CPI-U) rose 0.1% last month, half the Consensus expectation. Less food and energy, the rise in the "core CPI also was half expectations and the third 0.1% gain in a row.

Deflation in consumer goods prices continued for the second month as indicated by a 0.1% decline in the CPI for "core" commodities. Household furnishings & operations prices fell for the second month, down 0.2% (-0.6% y/y), apparel prices ticked down 0.2% (-0.5% y/y) and new vehicle prices were off for the fifth month this year (-1.3% y/y).

Services price inflation also was under control, indicated by a 0.1% rise in prices less energy. Shelter prices rose just 0.1% (2.7% y/y), the 0.2% (5.1% y/y) increase in health care services was the weakest gain in over a year and education & communication prices rose a tepid 0.1% (1.5% y/y) that reversed a 0.1% decline in July.

Gasoline prices added to the July decline with a 1.4% (+16.6% y/y) drop, though fuel oil prices were strong with a 5.3% (20.4% y/y) gain.

The chained CPI, which adjusts for shifts in the mix of consumer purchases, was unchanged. It is similar to the PCE price deflator. The core chain price measure was unchanged; it has not risen since April.

From the Federal Reserve Bank of San Francisco is this report titled "Does a Fall in the Dollar Mean Higher Consumer Prices?" .

Consumer Price Index Aug July Y/Y 2003 2002 2001
Total  0.1% -0.1% 2.7% 2.3% 1.6% 2.8%
 Total less Food & Energy 0.1% 0.1% 1.7% 1.5% 2.3% 2.7%
  Goods less Food & Energy -0.1% -0.3% -1.2% -2.0% -1.1% 0.3%
  Services less Energy 0.1% 0.3% 2.9% 2.9% 3.8% 3.7%
 Energy -0.3% -1.9% 10.6% 12.2% -5.8% 3.7%
 Food 0.1% 0.3% 3.6% 2.1% 1.8% 3.1%
             
Chained CPI: Total (NSA) 0.0% -0.1% 2.1% 1.9% 1.3% 2.3%
 Total less Food & Energy 0.0% 0.0% 1.2% 1.1% 1.9%  2.0%
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