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Economy in Brief

U.S. CPI Total -0.1%, Core Up 0.1503%
by Carol Stone September 19, 2007

The consumer price index (CPI-U) edged down 0.1% in August, a bit softer than the Consensus forecast for unchanged. The 0.2% rise in prices less food & energy was in line with expectations. Actually, carried out to more decimal precision, the core rate was 0.15% in August, compared with 0.24% in July, so slower by almost 0.1%.

The year-to-year gain in core consumer prices of 2.1% was its slowest since March 2006.

Core goods prices were flat on the month. July's 0.4% rise in apparel prices was reversed with a 0.4% decrease in August, producing a year/year decline of 1.5%; men's clothes and footwear had the largest declines, while women's clothes were down slightly and children's were up 0.3%. Among other major consumer items, vehicle prices were up 0.26%, with new vehicles higher by just 0.07% but used vehicles remain strong at 0.82%. Household furnishings were down 0.18%, almost the same as in July.

Core services prices rose 0.2% (3.2% y/y) following four consecutive months at 0.3%. Shelter prices rose just 0.15% (3.5% y/y) after July's 0.23%; owners' equivalent rent rose 0.23% (3.0% y/y) following July's 0.17%, but hotel rates -- lodging away from home -- fell 0.6% after July's 0.8% increase. Medical care services prices eased to a 0.5% increase (5.5% y/y) from 0.6% in July. Public transportation prices returned to their usual uptrend with a 0.5% rise; airfares were responsible for both a decline in July and August's pickup. Education service costs, including child care, rose 0.4%; most regular school fees slowed somewhat, but trade and technical school costs accelerated. Communications prices increased 0.1% (-0.8% y/y). Recreation goods and services fell 0.1% in August, putting the year/year change also at -0.1%; this is the first year-to-year decrease in this sub-index in its near-15-year history.

Energy prices fell 3.2% (-2.6% y/y) due to the 4.9% drop in gasoline prices (-6.4% y/y). Fuel oil prices stabilized with a 0.2% increase (0.5% y/y) after July's 3.4% jump, but natural gas & electricity prices fell 1.3% (+2.3% y/y).

Food & beverage prices rose 0.4% (4.2% y/y) as prices for meats, poultry & fish edged higher by 0.1% (5.4% y/y) following their decline in July. Dairy product prices remain very strong, up 1.7% in the month after July's 2.7%; these and previous advances put the year/year rate at 12.1%.

The chained CPI, which adjusts for shifts in the mix of consumer purchases, fell 0.1% (+1.8% y/y) for a second month; the core figure rose 0.2%, but its year/year increase slowed to 1.7% from 1.8% in the previous month.

Consumer Price Index Aug July June Y/Y 2006 2005 2004
Total  -0.1% 0.1% 0.2% 2.4% 3.2% 3.4% 2.7%
Total less Food & Energy 0.2% 0.2% 0.2% 2.2% 2.5% 2.2% 1.8%
Goods less Food & Energy 0.0% 0.1% -0.1% -0.6% 0.2% 0.5% -0.9%
  Services less Energy 0.2% 0.3% 0.3% 3.2% 3.4% 2.8% 2.8%
Energy -3.2% -1.0% -0.5% 1.0% 11.1% 16.9% 10.8%
Food & Beverages 0.4% 0.3% 0.5% 4.2% 2.3% 2.4% 3.4%
               
Chained CPI: Total (NSA) -0.1% -0.1% 0.2% 2.1% 2.8% 2.9% 2.5%
 Total less Food & Energy 0.2% 0.0% 0.0% 1.8% 2.3% 1.9% 1.7%
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