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Economy in Brief

CPI Eased: Energy Prices Lower
by Tom Moeller March 16, 2006

The February consumer price index (CPI-U) rose an expected 0.1% on the heels of the 0.7% spurt during January.

Price declines for most fuels dragged energy prices lower by 1.2%. Natural gas prices fell 4.5% (+26.8% y/y) and fuel oil prices dropped for the fifth straight month, down 2.8% (+24.2% y/y). Gasoline prices fell 1.0% (20.6% y/y) and dented the 6.4% January surge but in March, gasoline prices moved higher to $2.37 per gallon last week from the $2.28 February average.

Prices less food & energy rose a modest 0.1% that was less than the 0.2% Consensus expectation. Prices for core goods fell 0.1% due to a 1.0% (-1.7% y/y) decline in apparel prices and no change (0.5% y/y) in the prices for household furnishings & operation. Medical care commodity prices rose 0.3% (3.8% y/y).

A 0.3% increase in core services prices reflected a 0.4% (2.6% y/y) increase in shelter prices and a 0.5% (4.1% y/y) increase in prices for medical care services prices. School tuition & fees rose 0.3% (6.2% y/y) while public transportation prices fell 0.2% (+7.5% y/y).

Click here for a discussion of Owners Equivalent Rent and the Cost of Living by Federal Reserve Bank of New York economist Charles Steindel. This paper was presented at the Annual Meeting of the National Association for Business Economics (www.nabe.com) and later published in the January 2006 issue of the NABE journal Business Economics.

The gain in the chained CPI, which adjusts for shifts in the mix of consumer purchases, eased to 0.2% but less food & energy prices rose 0.4%.

The Federal Reserve Board's latest Beige Book can be found here.

Consumer Price Index Feb Jan Y/Y 2005 2004 2003
Total  0.1% -0.7% 2.6% 3.4% 2.7% 2.3%
 Total less Food & Energy 0.1% 0.2% 2.1% 2.2% 1.8% 1.5%
  Goods less Food & Energy -0.1% 0.2% 0.0% 0.5% -0.9% -2.0%
  Services less Energy 0.3% 0.2% 2.9% 2.8% 2.8% 2.9%
 Energy -1.2% 5.0% 20.1% 16.9% 10.9% 12.2%
 Food 0.1% 0.5% 2.8% 2.4% 3.4% 2.1%
             
Chained CPI: Total (NSA) 0.2% 0.7% 3.0% 2.9% 2.5% 2.0%
 Total less Food & Energy 0.4% 0.3% 1.8% 1.9% 1.7% 1.1%
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