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Economy in Brief

U.S. CPI Total Stable, Core Strongest Since 2006
by Tom Moeller February 20, 2008

The consumer price index (CPI-U) rose 0.4% last month, the same as during an upwardly revised December increase. (New seasonal factors were introduced for the last three years.) The latest increase was slightly ahead of expectations for a 0.3% rise. It also lifted the y/y comparison to its fastest since October 2005.

Less food & energy, consumer prices rose 0.3% in January. That also was ahead of expectations for a 0.2% gain and it was the quickest since June of 2006. A Comparison of Measures of Core Inflation from the Federal Reserve Bank of New York can be found here.

A faster 0.7% gain in food & beverage prices was the strongest since early last year. Prices for meats poultry & fish surged 0.8% (5.4% y/y) and prices for fruits & vegetables jumped 2.2% (6.2% y/y). Cereal & bakery product prices also have been quite strong and posted a 0.6% gain (5.7% y/y).

Core services prices rose 0.4% (3.4% y/y) and that was the fastest m/m rise since 2006. Shelter prices rose the same 0.3% (3.1% y/y) as during the prior two months. Owners equivalent rent of primary residence, a measure not equivalent to other house price measures, also rose 0.3% (2.8% y/y). Medical care services prices, however, were strong. The 0.6% increase doubled the December (5.7% y/y) rise. Tuition costs also posted a strong 0.6% (5.7% y/y) rise but the increase in public transportation prices cooled to 0.4% (5.8% y/y).

Core goods prices rose 0.2% and that was the fastest increase since early 2006. It mainly reflected a 0.4% rise in apparel prices that still left them down 0.2% y/y. Medical care commodity prices also were strong and rose 0.5% (2.5% y/y) but most other goods price increases were tame. Prices for new & used motor vehicles fell 0.1% (0.0% y/y) during January and prices of household furnishings & operation ticked up 0.1% (-0.5% y/y) after two months of having been unchanged.

Energy prices rose just 0.7% last month, well off the double digit rates of increase during the prior four months. The gain in gasoline prices eased to only 1.2% (34.5% y/y) and the weekly data already show a slight m/m decline this month. Prices for fuel oil & other fuels, however, were quite strong and rose 3.7% (34.7% y/y) but natural gas & electricity prices fell 0.5% (+3.% y/y).

The chained CPI, which adjusts for shifts in the mix of consumer purchases rose 0.5% (+3.9% y/y) and the core measure rose 0.3%, its fastest gain since October. This latter measure is similar to the core PCE price index but its treatment of housing price differs

Publishing Central Bank Interest Rate Forecasts from the Federal Reserve Bank of San Francisco can be found here.

Consumer Price Index January December November Jan Y/Y  2007 2006 2005
Total  0.4% 0.4% 0.9% 4.4%  2.9% 3.2% 3.4%
Total less Food & Energy 0.3% 0.2% 0.2% 2.5%  2.3% 2.5% 2.2%
  Goods less Food & Energy 0.2% 0.0% 0.1% 0.2%  -0.4% 0.2% 0.5%
    Services less Energy 0.4% 0.3% 0.3% 3.4%  3.4% 3.4% 2.8%
  Energy 0.7% 1.7% 6.9% 20.4%  5.6% 11.0% 17.0%
  Food & Beverages 0.7% 0.1% 0.4% 4.9%  4.0% 2.3% 2.5%
Chained CPI: Total (NSA)  0.5% -0.1% 0.5% 3.9% 2.5% 2.9% 2.9%
 Total less Food & Energy  0.3% -0.1% 0.0% 2.2% 2.0% 2.2% 1.9%
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