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Economy in Brief

U.S. CPI Total & Core Slightly Above Expectations
by Tom Moeller December 14, 2007

The consumer price index (CPI-U) rose 0.8% last month due to the surge in energy prices. The gain was the quickest since September of 2005, a month when higher energy prices similarly raised the index.A 0.6% rise in the November CPI had been expected by a Consensus of economists. The y/y gain in prices of 4.3% was its quickest since June of last year.

Core consumer price inflation picked up slightly to 0.3% after five months of 0.2% increase. A 0.2% gain was the general expectation. The y/y increase of 2.3% was its quickest in six months and the three month rise, to 2.6% (AR), has shown acceleration this year.

Energy prices soared 5.7%, the fastest rise since a 5.9% increase during March of this year. Those two gains were the quickest since an 11.8% surge in 2005. That was subsequently followed by m/m declines and/or more moderate gains in energy prices. Gasoline prices jumped 9.3% (37.1% y/y) last month but the weekly data already indicate a slight m/m decline in December. Prices for fuel oil & other fuels surged 11.9% (28.4% y/y) but natural gas & electricity prices rose just 0.7% (4.4% y/y).

Food & beverage prices rose 0.3% (4.7% y/y) but that was enough to lift the y/y increase to its fastest since 1991. Prices of dairy products were notably strong and rose 0.6% (14.0% y/y). Prices for fruits & vegetable jumped 1.6% (4.5% y/y) but prices for meats, poultry & fish fell 0.1% (5.4% y/y).

Core goods prices rose 0.2% after slight declines during each of the prior three months. Apparel prices surged 0.8% (-0.4% y/y) after having been unchanged in October. New & used motor vehicle prices were unchanged (-0.4% y/y) after two months of decline. Prices of household furnishings & operation rose a slight 0.1% (-0.7% y/y) after four straight months of decline.Tobacco prices increased 0.2% (8.2% y/y) for the second month but the y/y gain was its strongest since early 2003. The core CPI less tobacco rose 0.3% (2.3%).

Core services prices rose 0.3% (3.2% y/y). Shelter prices increased 0.3% (3.1% y/y) and that y/y change was its slowest since early this year. Owners equivalent rent of primary residence, a measure not equivalent to other house price measures, rose 0.3%, reducing the y/y gain to 2.8% y/y. Since a low several months ago of 1.8%, the three month change has picked up to 3.4%, its firmest since January. Public transportation prices rose 1.8% (6.1% y/y) and medical care services prices rose 0.3% (5.8% y/y). Education service prices rose 0.6% (5.5% y/y) after a firm 0.7% October gain but communication prices fell (-0.1% y/y) for the second consecutive month.

The chained CPI, which adjusts for shifts in the mix of consumer purchases rose 0.4% (3.6% y/y) but the core measure was unchanged. This latter measure is similar to the core PCE price index but its treatment of housing price differs

A Comparison of Measures of Core Inflation from the Federal Reserve Bank of New York can be found here.

Consumer Price Index November October September Y/Y  2006 2005 2004
Total  0.8% 0.3% 0.3% 4.3%  3.2% 3.4% 2.7%
Total less Food & Energy 0.3% 0.2% 0.2% 2.3%  2.5% 2.2% 1.8%
Goods less Food & Energy 0.2% -0.0% -0.0% 0.0%  0.2% 0.5% -0.9%
  Services less Energy 0.3% 0.2% 0.3% 3.2%  3.4% 2.8% 2.8%
Energy 5.7% 1.4% 0.3% 21.3%  11.1% 16.9% 10.8%
Food & Beverages 0.3% 0.3% 0.5% 4.8%  2.3% 2.4% 3.4%
          
Chained CPI: Total (NSA)  0.4% 0.2% 0.3% 3.6% 2.8% 2.9% 2.5%
 Total less Food & Energy  0.0% 0.3% 0.3% 2.0% 2.3% 1.9% 1.7%
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