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Economy in Brief

U.S. CPI Total & Core Unchanged
by Tom Moeller March 14, 2008

The consumer price index (CPI-U) was unchanged in February following two consecutive months of 0.4% increase. It compared to expectations for a 0.3% rise and was the weakest since prices were unchanged last August. A slight dip in the y/y rate of increase to 4.0% left it still at the second strongest growth rate since 2005.

Less food & energy, consumer prices also were unchanged m/m after January's elevated 0.3% increase. That also fell short of expectations for a 0.2% increase and it was the weakest reading since November 2006. The lack of an increase brought the y/y gain down to 2.3%, its lowest since last October. A Comparison of Measures of Core Inflation from the Federal Reserve Bank of New York can be found here.

Inflation of food & beverage prices took a breather last month and dipped to 0.4% after a 0.7% January increase. It nevertheless left the y/y gain elevated at 4.6%, up from a 4.0% rate of increase last year. Prices for meats poultry & fish actually fell 0.1% m/m (4.7% y/y) after a 0.8% January pop and prices for fruits & vegetables also fell by 1.3% (+1.4% y/y) after the 2.2% rise during January. Cereal & bakery product prices, however, surged 1.8%. The y/y increase here of 6.6% was the strongest since 1990.

Energy prices prices also were tame last month and posted a 0.5% decline. The drop owed to a 2.0% m/m decline in gasoline prices but that still left them up 32.7% from twelve months earlier. Moreover, the weekly data for this month already indicate that the respite from price strength has ended. A 5.5% m/m rise in average gasoline prices so far in March to $3.23 per gallon would be the strongest since November. Also, it will add by itself 0.3% to the March CPI increase. Prices for fuel oil & other fuels in February backed off 1.3% (+33.0% y/y) after a strong 3.7% January surge. Natural gas & electricity prices, however, worked the other way and rose 1.7% (3.5% y/y).

Core goods prices in February dipped 0.1%, the first m/m decline since last June. It reflected a 0.3% decline (-1.0% y/y) in apparel prices and no change (-0.6% y/y) in household furnishings & operations (-0.6% y/y). Prices for new & used motor vehicles also fell by 0.2% (0.0% y/y) during February.

Core services price inflation also took a breather in February and eased to 0.1%. Shelter prices, which constitute 33% of the total CPI, were unchanged (2.9% y/y). Owners equivalent rent of primary residence, a measure not equivalent to other house price measures, ticked up 0.1% (2.6% y/y). Medical care services prices also rose just 0.1% after a 0.6% January surge. Prices were up a strong 5.0% y/y after last year's 5.3% increase. Tuition costs rose 0.3% (5.5% y/y), about equal to the strong 5.6% gain during all of last year. Public transportation prices dipped 0.1% (+5.2% y/y).

Stable Prices, Stable Economy: Keeping Inflation in Check Must be No. 1 Goal of Monetary Policymakers from the Federal Reserve bank of St. Louis is available here.A Falling Dollar Raises Inflation in the Gulf also from the Federal Reserve Bank of St. Louis can be found here.

Consumer Price Index (%) February January December Feb. Y/Y  2007 2006 2005
Total  0.0 0.4 0.4 4.0  2.9 3.2 3.4
Total less Food & Energy 0.0 0.3 0.2 2.3  2.3 2.5 2.2
  Goods less Food & Energy -0.1 0.2 0.0 0.0  -0.4 0.2 0.5
    Services less Energy 0.1 0.4 0.3 3.2 3.4 3.4 2.8
  Energy -0.5 0.7 1.7 18.9 5.6 11.0 17.0
  Food & Beverages 0.4 0.7 0.1 4.6  4.0 2.3 2.5
Chained CPI: Total (NSA)  0.3 0.5 -0.1 3.7 2.5 2.9 2.9
 Total less Food & Energy  0.3 0.3 -0.1 2.0 2.0 2.2 1.9
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