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Economy in Brief

CPI Lifted By Strong Energy Prices
by Tom Moeller September 15, 2005

Consumer prices (CPI-U) rose an expected 0.5% last month, the same as the unrevised increase in July. The gain in prices less food & energy prices also has been stable, the same 0.1% for four months. Consensus expectations had been for a 0.2% increase.

Energy prices added to the prior month's strength and jumped 5.0% led by an 8.3% (31.4% y/y) rise in gasoline prices to an average $2.49 per gallon. In August gasoline prices have risen further to over $3.00 per gallon. Fuel oil prices also rose a strong 2.9% (33.2% y/y increase and natural gas prices rose 1.3% (7.7% y/y).

Core goods prices rose 0.1%. This second increase in seven months was led by a 1.0% (-1.6% y/y) rise in apparel prices and a 1.3% (0.2% y/y) gain in audio & equipment. Tobacco prices also rose 0.6% (5.2% y/y). New vehicle prices, down 0.5% (+0.1% y/y), fell hard for the second consecutive month and furniture & bedding prices fell 0.5%(-1.2% y/y).

Core services prices rose a modest 0.1% as shelter prices were unchanged (+2.5% y/y) and as medical care services prices fell slightly (4.5% y/y). Public transportation prices rose just 0.1% (6.5% y/y) and school tuition costs rose 0.2% (6.3% y/y).

The chained CPI which adjusts for shifts in the mix of consumer purchases rose 0.4% and less food & energy chain prices rose 0.2%.

Trimmed Mean PCE Inflation from the Federal Reserve Bank of Dallas can be found here.

Reading Inflation Expectations from CPI Futures from the Federal Reserve Bank of St. Louis is available here.

Consumer Price Index Aug July Y/Y 2004 2003 2002
Total  0.5% 0.5% 3.6% 2.7% 2.3% 1.6%
 Total less Food & Energy 0.1% 0.1% 2.2% 1.8% 1.5% 2.3%
  Goods less Food & Energy 0.1% -0.3% 0.7% -0.9% -2.0% -1.1%
  Services less Energy 0.1% 0.3% 2.7% 2.8% 2.9% 3.8%
 Energy 5.0% 3.8% 20.3% 10.9% 12.2% -5.9%
 Food 0.0% 0.2% 2.2% 3.4% 2.1% 1.8%
             
Chained CPI: Total (NSA) 0.4% 0.4% 3.0% 2.3% 2.0% 1.3%
 Total less Food & Energy 0.2% 0.0% 1.8% 1.5% 1.1% 1.9%
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