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Economy in Brief

Record Gain in Energy Prices Lifted CPI; Core Prices Tame
by Tom Moeller October 14, 2005

The consumer price index (CPI-U) was a bit stronger than Consensus expectations for a 0.9% rise last month. The 1.2% gain was the strongest for any month since 1980 and lifted the y/y increase to its strongest (4.7%) since 1991.

Higher energy prices continued to fuel the m/m increase and rose 12.0%, an all-time record. The 17.9% m/m rise in gasoline prices to an average $2.90 per gallon also was a record advance but prices have fallen slightly in October. Fuel oil prices also were strong, up 11.8% (46.0% y/y), while natural gas & electricity prices jumped 4.6% (13.5% y/y).

Prices less food & energy rose the same 0.1% as during the prior four months and again the gain was less than Consensus expectations for a 0.2% increase. Core goods prices rose 0.1% for the second consecutive month. Apparel prices fell 0.1% (-0.7% y/y) and most household furnishings prices fell as well. New vehicle prices rose 0.4% (0.7% y/y) and tobacco prices rose 0.7% (5.6% y/y).

Core services prices rose 0.1% for the second consecutive month as shelter prices fell 0.1% (+2.0% y/y) offset by a 0.3% (4.4% y/y) gain in medical care services prices. Public transportation prices rose 0.1% (7.5% y/y) for the second month and school tuition costs jumped 0.7% (6.3% y/y).

The chained CPI which adjusts for shifts in the mix of consumer purchases rose 0.8% and less food & energy chain prices rose 0.2%.

Update on the U.S. Economy and Fiscal Outlook, a speech made yesterday by Federal Reserve Board Governor Mark W. Olson, is available here.

Consumer Price Index Sept Aug Y/Y 2004 2003 2002
Total  1.2% 0.5% 4.7% 2.7% 2.3% 1.6%
 Total less Food & Energy 0.1% 0.1% 2.0% 1.8% 1.5% 2.3%
  Goods less Food & Energy 0.1% 0.1% 0.6% -0.9% -2.0% -1.1%
  Services less Energy 0.1% 0.1% 2.5% 2.8% 2.9% 3.8%
 Energy 12.0% 5.0% 35.1% 10.9% 12.2% -5.9%
 Food 0.3% 0.0% 2.5% 3.4% 2.1% 1.8%
             
Chained CPI: Total (NSA) 0.8% 0.4% 3.5% 2.3% 2.0% 1.3%
 Total less Food & Energy 0.2% 0.2% 1.8% 1.5% 1.1% 1.9%
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