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Economy in Brief

CPI Lifted By Energy & Food
by Tom Moeller February 22, 2006

The 0.7% gain in the January consumer price index (CPI-U) was the strongest for any month since last September and lifted the y/y gain to a firm 4.0%. Consensus expectations had been for a 0.5% m/m rise.

Energy prices ballooned 5.0% as gasoline prices rose 6.4% (27.4% y/y) and electricity prices surged 5.5% (15.1% y/y). The price charged by utilities for natural gas (34.5% y/y) also rose but both in January & February the spot market price for gas fell sharply. The average retail price paid for gasolinealso fell in February to $2.29 per gallon from $2.32 during January.

The 0.5% jump in food prices was the strongest for any month since last April and reflected a 1.7% (6.3% y/y) surge in fruits & vegetables as well as 0.5% increases in the prices of cereals (1.4% y/y) and dairy products (0.3% y/y).

Prices less food & energy rose a moderate 0.2% and matched Consensus expectations. Prices for core goods and for core services both rose 0.2%.

Apparel prices (-1.0% y/y) recovered 0.3% after a like decline during December and new vehicle prices rose 0.6% (-0.4% y/y) after two down months. Furniture & bedding prices (0.4% y/y) fell slightly as did appliance prices (+1.9% y/y). Medical care commodity prices doubled the December increase and rose 0.4% (3.8% y/y).

The 0.2% increase in core services prices was held back by an unchanged level of medical care services prices (4.1% y/y) but school tuition & fees jumped 0.7% (6.4% y/y). Shelter prices inched up 0.1% (2.5% y/y) while public transportation prices surged 1.3% (7.5% y/y).

The chained CPI which adjusts for shifts in the mix of consumer purchases jumped 0.7%. Less food & energy prices rose a moderate 0.3%.

The minutes of the latest meeting of the Federal Open Market Committee can be found here.

Consumer Price Index Jan Dec Y/Y 2005 2004 2003
Total  0.7% -0.1% 4.0% 3.4% 2.7% 2.3%
 Total less Food & Energy 0.2% 0.1% 2.1% 2.2% 1.8% 1.5%
  Goods less Food & Energy 0.2% 0.0% 0.1% 0.5% -0.9% -2.0%
  Services less Energy 0.2% 0.3% 2.9% 2.8% 2.8% 2.9%
 Energy 5.0% -2.1% 24.7% 16.9% 10.9% 12.2%
 Food 0.5% 0.1% 2.7% 2.4% 3.4% 2.1%
             
Chained CPI: Total (NSA) 0.7% -0.3% 3.4% 2.9% 2.5% 2.0%
 Total less Food & Energy 0.3% -0.1% 1.8% 1.9% 1.7% 1.1%
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