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Economy in Brief

Core CPI Moderate As Energy Costs Jumped, Again 
by Tom Moeller August 16, 2006

Consumer prices (CPI-U) during July rose an expected 0.4%, the average rate of monthly increase for the last five months. A somewhat more moderate increase, however, was posted by prices less food & energy. The 0.2% increase compared to a 0.3% average of the last five months and was lower than expectations for a 0.3% gain.

The 2.9% m/m spike in energy prices reflected a 5.3% (29.6% y/y) surge in gasoline prices, although weekly gasoline prices have since stabilized in August somewhat at $3.00 per gallon. Natural gas & electricity prices in July ticked up 0.1% (10.5% y/y) after five consecutive months of decline.

Core goods prices fell 0.1% after three months of 0.1% increase. Furniture & bedding costs reversed the prior month's increase with a 0.3% decline (+1.4% y/y) while apparel prices dropped 1.2% (0.0% y/y). Appliance prices increased 0.3% (1.1% y/y) and new & used motor vehicle prices rose 0.2% (0.5% y/y). Tobacco prices were unchanged in July (3.6% y/y) while medical care commodity prices rose 0.3% (3.9% y/y).

Core services prices rose 0.4%, the same as during the prior two months. Shelter prices increased another 0.4% (3.6% y/y) as the rental equivalence measure of owners' primary residences rose 0.4% (3.7% y/y) and rents also rose 0.4% (3.6% y/y). Public transportation costs moderated somewhat from prior months' strength and increased 0.4% (5.0% y/y).Education cost inflation ticked up to 0.6% (6.0% y/y) but medical care services price inflation dipped to 0.2% (4.0% y/y).

Food & beverage prices rose 0.2% though meat, fish & poultry prices fell 0.6% (+0.2% y/y). Fruit & vegetable prices jumped for the second consecutive month and rose 0.9% (3.7% y/y) while dairy prices ticked up another 0.1% (-0.5% y/y).

The chained CPI, which adjusts for shifts in the mix of consumer purchases, rose 0.1% while less food & energy prices were unchanged last month.

The Effects of Rounding on the Consumer Price Index from the U.S. Bureau of Labor Statistics can be found here.

Consumer Price Index July June Y/Y 2005 2004 2003
Total  0.4% 0.2% 4.2% 3.4% 2.7% 2.3%
 Total less Food & Energy 0.2% 0.3% 2.7% 2.2% 1.8% 1.5%
  Goods less Food & Energy -0.1% 0.1% 0.5% 0.5% -0.9% -2.0%
  Services less Energy 0.4% 0.4% 3.6% 2.8% 2.8% 2.9%
 Energy 2.9% -0.9% 20.5% 16.9% 10.8% 12.2%
 Food & Beverages 0.2% 0.3% 2.2% 2.4% 3.4% 2.1%
             
Chained CPI: Total (NSA) 0.1% 0.3% 3.5% 2.9% 2.5% 2.0%
 Total less Food & Energy 0.0% 0.1% 2.5% 1.9% 1.7% 1.1%
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