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Economy in Brief

Consumer Price Inflation Again Raised By Energy
by Tom Moeller May 18, 2005

The CPI-U rose 0.6% in April due to a 4.5% jump in energy prices. Consensus expectations had been for a 0.4% rise in the total.Food prices also were strong posting a 0.7% advance, the strongest in nearly a year. Over the first four months of 2005 the CPI rose 4.8% at an annual rate.

Prices less food & energy were unchanged last month, the first unchanged monthly reading since 2003. During the first four months of this year the core CPI rose 2.6% at an annual rate. Consensus expectations had been for a 0.2% increase in April.

Core goods prices fell for the first month since last August. Apparel prices reversed much of the prior month's strength with a 0.6% decline (-0.5% y/y). Home furnishings & operation prices were unchanged for the second consecutive month due to a 1.5% (-0.8% y/y) drop in prices of window & wall coverings. Appliance prices (-0.1% y/y) and furniture prices (-0.6% y/y) also are down year to year. New & used motor vehicle prices were unchanged (+1.6% y/y).

Services price inflation eased. Less energy, the 0.2% increase was the weakest since January. Shelter prices were unchanged (2.7% y/y) following a 0.6% pop in March while the gain in medical care services prices halved to 0.3% (5.0% y/y). Public transportation prices were strong for the second consecutive month, up 1.7% (1.7% y/y), and school tuition rose another 0.6% (6.5% y/y).

Energy prices added to the prior month's increase. The 4.5% increase was pumped by a 6.4% (24.3% y/y) rise in gasoline prices, a 4.8% (33.4% y/y) jump in fuel oil prices and a 2.3% (8.1% y/y) surge natural gas & electricity prices. In May gasoline prices have fallen to an average $2.20 per gallon ($2.16 in the latest week) versus $2.24 averaged in April.

Food prices jumped 0.7% due to a 3.4% (5.2% y/y) recovery in fruit & vegetable prices following four months of decline. Beverage prices also were strong for the second month, up 1.1% (3.6% y/y) and prices of meat, poultry & fish prices doubled the 0.2% March increase (3.1% y/y).

The chained CPI which adjusts for shifts in the mix of consumer purchases rose 0.5%. Core chain prices eased, however, to 0.2%.

A Walk Around the World Economy, remarks by Richard W. Fisher, President and Chief Financial Officer of the Federal Reserve Bank of Dallas are available here.

Consumer Price Index April March Y/Y 2004 2003 2002
Total  0.5% 0.6% 3.5% 2.7% 2.3% 1.6%
 Total less Food & Energy 0.0% 0.4% 2.2% 1.8% 1.5% 2.3%
  Goods less Food & Energy -0.1% 0.0% 0.5% -0.9% -2.0% -1.1%
  Services less Energy 0.2% 0.5% 2.9% 2.8% 2.9% 3.8%
 Energy 4.5% 4.0% 16.9% 10.9% 12.2% -5.9%
 Food 0.7% 0.2% 3.1% 3.4% 2.1% 1.8%
             
Chained CPI: Total (NSA) 0.5% 0.7% 2.9% 2.3% 2.0% 1.3%
 Total less Food & Energy 0.2% 0.5% 1.9% 1.5% 1.1% 1.9%
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