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Economy in Brief

Consumer Prices Rose Less Than Expected
by Tom Moeller July 14, 2005

The CPI-U was unchanged last month following a 0.1% decline in May. The figure was below Consensus expectations for a 0.2% increase in June. During the first half of 2005 the CPI rose 3.1% at an annual rate.

Energy prices fell 0.5% led by a 1.2% drop in gasoline prices but gas prices so far in July have more than reversed recent months' declines, rising 5.6% to an average $2.28 per gallon and $2.33 in the latest week. Food prices rose a modest 0.1% for the second month.

Less food & energy prices rose the same 0.1% as in May and during the first six months of this year the core CPI is up 2.2% at an annual rate. Consensus expectations had been for a 0.2% increase in June.

Core goods prices fell for the second month in the last three. The 0.2% decline was led by a 1.3% (-2.8% y/y) drop in furniture & bedding prices and no change (+1.5% y/y) in appliance prices. Apparel prices also fell by 0.7% (-1.5% y/y) and are down 1.0% (AR) so far this year. New motor vehicle prices were unchanged (0.7% y/y) but prices for used cars & trucks rose 0.8% (7.1% y/y).

Core services prices rose a modest 0.2%. Shelter prices rose 0.2% (2.4% y/y) after two months of no change and medical care services prices rose 0.2% (4.8% y/y), the least for any month since April 2003. Public transportation prices were strong for the fourth consecutive month, up 1.2% (4.7% y/y) and school tuition costs rose 0.4% (6.6% y/y).

The chained CPI which adjusts for shifts in the mix of consumer purchases fell 0.1% and less food & energy chain prices fell for the second consecutive month.

Consumer Price Index June May Y/Y 2004 2003 2002
Total  0.0% -0.1% 2.5% 2.7% 2.3% 1.6%
 Total less Food & Energy 0.1% 0.1% 2.1% 1.8% 1.5% 2.3%
  Goods less Food & Energy -0.2% 0.2% 0.5% -0.9% -2.0% -1.1%
  Services less Energy 0.2% 0.1% 2.7% 2.8% 2.9% 3.8%
 Energy -0.5% -2.0% 7.4% 10.9% 12.2% -5.9%
 Food 0.1% 0.1% 2.3% 3.4% 2.1% 1.8%
             
Chained CPI: Total (NSA) -0.1% 0.0% 2.2% 2.3% 2.0% 1.3%
 Total less Food & Energy -0.2% -0.1% 1.8% 1.5% 1.1% 1.9%
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