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Economy in Brief

U.S. CPI Fell Again With Lower Gasoline Prices
by Tom Moeller October 16, 2008

The consumer price index (CPI-U) fell just slightly last month, according to the Bureau of Labor Statistics, after an unrevised 0.1% dip during August. Consensus expectations had been for a 0.1% uptick. The latest figure lowered the three-month rate of change to 2.6% from 7.2%.

Energy prices again moved lower, during September by 1.9%. Fuel oil prices fell hard by 5.8% (+38.2% y/y) after a 6.5% skid in August. Prices for natural gas & electricity also were quite weak and they fell 3.2% (+10.9% y/y). Gasoline prices dipped just 0.6% (+31.7% y/y) but they have since moved lower this month to $3.15 from an average $3.70 last month.

Food & beverage prices rose the same, strong 0.6% as they did during August. The y/y gain of 6.0% was the fastest since early 1990. For the third straight month prices for meats poultry & fish rose 1.0% and they are up at a 12.9% annual rate during that period. Prices for cereals & bakery products jumped 1.1% (12.3% y/y) but prices for dairy product prices fell 0.6% (+4.9% y/y).

The CPI less food & energy rose just 0.1% and the gain fell slightly short of expectations for a 0.2% increase. The three-month rate of increase fell back to 2.7% from its recent high of 3.5%.

Core goods prices reversed the August increase and fell 0.2%. The decline was led by lower prices for new & used motor vehicles which were down another 0.9% (-1.6% y/y). Apparel prices fell 0.1% but the y/y increase remained positive at 1.4%. Apparel prices fell 0.4% last year. Prices for household furnishings & operations rose 0.5% (1.2% y/y) and that was enough to pull the y/y gain to 1.9%, the strongest y/y increase since 2000. Tobacco prices were unchanged (6.8% y/y).

Core services prices were firm again and they rose 0.3%. That left the three-month growth rate at 3.2%. Medical care services prices continued firm and they rose 0.4% (3.8% y/y). Education costs also have been strong and last month rose 0.4% (6.1% y/y). Shelter prices increased 0.3% (2.4% y/y) but that was the weakest y/y gain since early-2006. Owners equivalent rent of primary residence, a measure not equivalent to other house price measures, increased 0.2% (2.4% y/y). Rents rose for the third straight month by 0.3% (3.8% y/y). Public transportation prices gave back a piece of prior months' strength with a 1.0% decline (13.3% y/y). Though recreation prices rose just 0.2%, the 2.4% y/y rise compares to a 0.5% increase during all of last year.

The chained CPI, which adjusts for shifts in consumption patterns, fell 0.1%. Less food and energy, chained prices rose 0.2% for the third straight month.

Yesterday's speech by Fed Chairman Ben S. Bernanke can be found here.

Fed Vice Chairman Donald L. Kohn also spoke yesterday on the Economic Outlook and his comments can be found here.

Consumer Price Index (%) September August Y/Y  2007 2006 2005
Total  -0.0 -0.1 4.9 2.9 3.2 3.4
Total less Food & Energy 0.1 0.2 2.5 2.3 2.5 2.2
  Goods less Food & Energy -0.2 0.1 0.5 -0.4 0.2 0.5
    Services less Energy 0.3 0.2 3.2 3.4 3.4 2.8
  Energy -1.9 -3.1 23.3 5.6 11.0 17.0
  Food & Beverages 0.6 0.6 6.0 3.9 2.3 2.5
Chained CPI: Total (NSA)  -0.1 -0.2 4.3 2.5 2.9 2.9
 Total less Food & Energy  0.2 0.2 2.2 2.0 2.2 1.9
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