Recent Updates
- Israel: Average Housing Prices (Q2)
- Japan: NCI Economic Activity Index (Aug)
- US: NAHB/Wells Fargo Housing Market Index (Aug)
- Canada: Wholesale trade, MSIO (June)
- Pakistan: Foreign Currency Deposits and Utilization (JUL)
- more updates...
Economy in Brief
U.S. Housing Affordability Declines Further in June
The NAR Fixed Rate Mortgage Housing Affordability Index fell 3.6% in June...
EMU Output Makes Solid Gain in June
The European Monetary Union posted a 0.7% increase for industrial output in June...
U.S. Producer Prices Fall During July; Core Increase Weakens
The Producer Price Index for Final Demand fell 0.5% during July...
U.S. Unemployment Claims Continue on an Uptrend
Initial claims for unemployment insurance filed in the week ended August 6 rose 14,000 to 262,000...
RICS Survey Points to More U.K. Housing Sector Weakness
The survey of housing market conditions in the U.K. continues to show strength in prices versus weakness...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Robert Brusca May 14, 2007
CPI Headline +0.4% +2.6% y/y.
CPI-Core: +0.2% +2.3% y/y.
The CPI headline is a touch better than expected. The core at 0.2% is as excepted bringing the Core year/year pace to 2.3% year/year at the boundary of Fed discomfort.
It is not a report to change monetary policy.
Core Commodities inflation fell by 0.1% on the month while Services core inflation expanded by 0.3%. Year-on-year commodities core inflation is -0.5% while core services inflation is at a stubborn 3.5%.
Medical care inflation popped back up to +0.4% after posting +0.1% last month. Apparel prices fell by 0.3% after a 1% drop last month and are lower by 0.4% year/year. Housing costs were steady at 0.2% for the second month in a row while owners equivalent rent fell to +0.2% from +0.3%.
Core CPI goods and services inflation are in declining trends with goods showing a faster pace of decline and service inflation much more stubborn. Diffusion shows that inflation is not accelerating overall. With Total and Core inflation diffusion readings at 46.4 and 42.9 respectively for month/month changes in the item by item inflation rate, we see that inflation itself is decelerating on the month in more CPI and Core categories than it is accelerating.
However, inflation excluding energy has been stuck at a pace of 2.4% to 2.6% for three-, six- and 12-month trends. Excluding tobacco, core inflation is holding just below 2% for three months and six months. Both energy and food inflation remain nettlesome.
This is a report to keep the Fed on guard. With the year/year trends in core services and core goods prices on the decline, the pace of service inflation is still very high
An inflation rate that depends on faster dropping goods prices to offset stubborn services inflation is simply not on strong ground.
Overview: Moderation is back in play | ||||||||
Quick Summary | Yr/Yr | 6-Mo a.r | 3-Mo a.r | Year-To-Date 2007 2006 |
One Mo. Diffusion |
|||
CPI | 2.6% | 4.2% | 5.7% | -- | 4.8% | 4.6% | 46.4 | -- |
Core CPI | 2.4% | 2.0% | 1.9% | -- | 2.2% | 2.8% | 42.9 | -- |
Commodity Category | Mo a.r | % Wgt | Annualized Inflation Rate For Last: | Mo/Mo Not Annualized |
||||
By Expenditure Category | April 2007 | -- | 3-Mos | -- | 6-Mos | -- | Year | Apr.2007 |
All Items | 5.1% | 100.00 | 5.7% | -- | 4.2% | -- | 2.6% | 0.4% |
By Economic Group | ||||||||
All: Excl Food & Energy | 2.1% | 77.10 | 1.9% | -- | 2.0% | -- | 2.4% | 0.2% |
(Median Increase) | 3.4% | 100.00 | 3.4% | -- | 3.5% | -- | 2.9% | 0.3% |
Excl. Energy | 2.6% | 92.32 | 2.6% | -- | 2.4% | -- | 2.6% | 0.2% |
Commodities: Excl Food & Energy | -1.5% | 22.77 | -0.5% | (29% of core) | -0.9% | -- | -0.5% | -0.1% |
Services: Excl Energy | 3.6% | 54.33 | 2.9% | (71% of core) | 3.1% | -- | 3.5% | 0.3% |
Core CPI less Tobacco | 2.2% | -- | 1.9% | -- | 1.9% | -- | 2.3% | 0.2% |
Food & Energy | ||||||||
Energy | 70.9% | 7.68 | 77.7% | -- | 38.0% | -- | 3.1% | 4.6% |
Food | 5.1% | 15.22 | 6.1% | -- | 4.2% | -- | 3.7% | 0.4% |
Red values indicated inflation pickup from previous period in table above |