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Economy in Brief

U.S. CPI Gain Quickest Since May, Core Rate 0f 0.2% Stable
by Tom Moeller October 17, 2007

The consumer price index (CPI-U) rose 0.3% last month and that was the quickest since May. At 2.8%, the y/y rise also picked up and was the fastest since March. The September increase was slightly ahead of expectations for a 0.2% gain.

Food & beverage prices continued with a pattern of steadily increasing rates of change with a 0.5% (4.4% y/y) rise. That y/y increase is double the rate of last December. Prices for meats, poultry & fish firmed by 0.5% (5.5% y/y) and prices of dairy product prices jumped another 1.0% with the y/y gain a whopping 13.2%.

Energy prices were somewhat tame last month, rising just 0.3%, but gasoline prices (+8.7% y/y y/y) rose slightly for the first month in the last four. Fuel oil prices jumped 1.0% (6.5% y/y) but natural gas & electricity prices rose 0.1% (1.4% y/y) after five consecutive months of decline.

Core consumer price inflation held stable at 0.2% for the fifth month in the last six and the y/y increase held stable with August at 2.1%.

Core goods prices fell just slightly as they did in August. Apparel prices again reversed direction and rose 0.3% (-1.7% y/y) after a 0.5% August decline and a 0.4% July increase. New & Used motor vehicle prices were under pressure and fell 0.2% (-1.3% y/y) while prices of household furnishings & operation fell for the third straight month by 0.2% (-0.7% y/y).Tobacco prices again provided much of the lift to goods price inflation with an accelerated 0.8% (7.5% y/y) rise.

Core services prices rose slightly faster than in August by 0.3% (3.3% y/y) following four consecutive months at 0.3%. Shelter prices rose 0.3% (3.5% y/y) reflecting a 0.3% (2.9% y/y) rise in owners equivalent rent of primary residence, a measure not at all equivalent to straight house price measures. Inflation of public transportation prices has picked up recently and showed a second straight 0.5% (0.5% y/y) increase while medical care services prices rose a somewhat diminished 0.4% (5.6% y/y). Education service prices rose just 0.2% (5.3% y/y) but communication prices were unchanged (-0.6% y/y).

The chained CPI, which adjusts for shifts in the mix of consumer purchases rose 0.3% (2.3% y/y) the core measure also rose 0.3%, 1.7% y/y.

Minutes of the Federal Reserve Board Discount Rate Meetings, August 16 through September 18, 2007 are available here.

Consumer Price Index Sept Aug July Y/Y 2006 2005 2004
Total  0.3% -0.1% 0.1% 2.8% 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% -0.0% 0.1% -0.8% 0.2% 0.5% -0.9%
  Services less Energy 0.3% 0.2% 0.3% 3.3% 3.4% 2.8% 2.8%
Energy 0.3% -3.2% -1.0% 5.4% 11.1% 16.9% 10.8%
Food & Beverages 0.5% 0.4% 0.3% 4.4% 2.3% 2.4% 3.4%
             
Chained CPI: Total (NSA) 0.3% -0.1% -0.1% 2.3% 2.8% 2.9% 2.5%
 Total less Food & Energy 0.3% 0.2% 0.0% 1.7% 2.3% 1.9% 1.7%
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