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Economy in Brief

U.S. CPI Total & Core Tame
by Tom Moeller January 16, 2008

The consumer price index (CPI-U) last month rose 0.3%. The increase was slightly ahead of expectations for a 0.2% rise. It was well below the heightened 0.8% November jump and equal to the gains of the prior two months, Nevertheless, the Dec/Dec gain of 4.1% was the fastest since a 6.3% spike in 1990.

Consumer price inflation less food & energy in December dropped slightly to 0.2% from November's gain of 0.3%. The rise equaled the increases during the prior five months and matched Consensus expectations. The Dec/Dec increase of 2.4% was down from the 2006 rise of 2.6% but up from the four years prior.

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

Tobacco prices provided oomph to December costs with a 0.8% (7.5% y/y) rise, but not enough to much influence the overall price picture. Less tobacco, core consumer prices rose 0.2% 2.4% (y/y)

Energy prices decelerated last month to a 0.9% increase from the 5.9% November rise. The deceleration was not enough, however, to keep the Dec/Dec rise from outpacing all increases since 1990. Gasoline prices rose another firm 1.1% (29.6% y/y) after November's 9.3% spike and the weekly data already show a 2.4% m/m rise in January. Prices for fuel oil & other fuels rose 2.0% (28.4% y/y) and natural gas & electricity prices increased 0.5% (3.5% y/y).

Food & beverage prices were unchanged m/m but again the y/y story is one of acceleration, in this case sharp acceleration. The 4.8% Dec/Dec gain was the quickest since 1990. Though prices of dairy products slipped 0.4% last month, the Y/Y rise of 13.4% was the fastest since a 22.6% spike during 1973. Prices for fruits & vegetable fell 0.4% (+5.9% y/y) and but prices for meats, poultry & fish fell 0.1% (+5.3% y/y).

Core goods prices were unchanged and the 0.1% rise was the weakest since 2004. Apparel prices rose 0.2% last month but fell 0.3% y/y. The pattern was the same for prices of new & used motor vehicles which rose 0.1% during December but fell 0.1% y/y. Prices of household furnishings & operation were unchanged and fell 0.8% y/y.

Core services prices rose 0.3% (3.3% y/y) for the second month. Shelter prices increased 0.3% (3.1% y/y) and the y/y gain was down from 4.1 during 2006. 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. The Y/Y rise was down from 4.3% in 2006. Public transportation prices popped again, last month by 1.2% (7.2% y/y) and medical care services prices rose 0.3% (5.9% y/y). Tuition rose 0.5% (5.4% y/y), though the firm y/y gain was the weakest since 2001.

The chained CPI, which adjusts for shifts in the mix of consumer purchases fell 0.1% (+3.4% y/y) and the core measure also fell 0.1%. This latter measure is similar to the core PCE price index but its treatment of housing price differs

Consumer Price Index December November October Dec Y/Y  2007 2006 2005
Total  0.3% 0.8% 0.3% 4.1%  2.9% 3.2% 3.4%
Total less Food & Energy 0.2% 0.3% 0.2% 2.4%  2.3% 2.5% 2.2%
  Goods less Food & Energy 0.0% 0.2% -0.0% 0.1%  -0.4% 0.2% 0.5%
    Services less Energy 0.3% 0.3% 0.2% 3.3%  3.4% 3.4% 2.8%
  Energy 0.9% 5.7% 1.4% 17.5%  5.6% 11.1% 16.9%
  Food & Beverages 0.0% 0.3% 0.3% 4.8%  3.9% 2.3% 2.4%
        
Chained CPI: Total (NSA)  -0.1% 0.4% 0.2% 3.4% 2.5% 2.8% 2.9%
 Total less Food & Energy  -0.1% 0.0% 0.3% 2.1% 2.0% 2.3% 1.9%
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