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Economy in Brief

U.S. CPI Ticked Up
by Tom Moeller February 20, 2009

During February the consumer price index (CPI-U) rose for the first month since July, according to the U.S. Bureau of Labor Statistics. The 0.3% gain followed drops of 0.8% and 1.7% during December and November. Due to those earlier sharp declines the three-month rate of change remained quite weak at -8.4% (AR). The latest increase matched Consensus expectations.

A 1.7% rise in energy prices led last month's increase in the CPI after having been down during the previous five months. Gasoline prices reversed earlier declines with a 6.0% (-40.4% y/y) increase to an average of $1.79 per gallon of regular. Still moving lower last month, however, were fuel oil prices which fell 2.7% (-19.5% y/y).  It was their sixth consecutive monthly drop while prices for natural gas & electricity fell 0.8% m/m (+7.2% y/y).

Increases in food & beverage prices have very much tapered off from their strong gains earlier this year.  A 0.1% uptick followed a like gain during December. That pulled the three month annual rate of increase down to 1.4% after growth as high as 8.7% this summer.  Outright declines in meat and dairy product prices as well as much easier growth in cereal & bakery product costs account for the moderation.

Core prices (CPI less food and energy) showed their strongest increase since August with a 0.2% rise.  However, despite the increase the year-to-year gain of 1.7% remained its weakest since mid-2004. Little or no growth in core prices during the prior four months accounts for the moderation.

Core goods prices rose for the first time since July.  The 0.3% increase reversed the prior month's decline but nevertheless left the three-month rate of change at a negative 0.9%. Prices of new & used motor vehicles increased for the first time in a year, but the 0.2% rise left them down 3.2% during that period.  Lower prices of used cars paced the decline with a 9.2% twelve month decrease.  Apparel prices ticked up 0.3% (-0.9% y/y) while prices for household furnishings & operations ticked lower by 0.1% (+1.8% y/y).  Appliance prices were up 2.0% y/y while furniture prices were unchanged y/y.  Tobacco prices again were strong during January and they posted a 0.8% increase (+6.1% y/y).

Gains in core services prices continued moderate with a 0.2% increase That left the three-month rate of increase at 1.6% (AR) after growing at a 3.9% rate this past summer.  Medical care services prices rose 0.5% (3.0% y/y) which was their strongest increase in twelve months.  Education costs posted a 0.3% increase and the year-to-year rise of 5.5% was stable with the growth in recent years, though down from the 6.9% increase during 2004. Shelter prices rose 0.2% and the y/y increase fell to 1.8%. As the housing market remained deeply depressed, owners equivalent rent of primary residence, a measure not equivalent to other house price measures, rose 0.3% (2.2% y/y).  Public transportation prices fell hard for the fifth consecutive month and were unchanged year-to-year.  Recreation prices also were unchanged last month and they have been flat or down during the last there periods, +1.6% y/y.

The chained CPI, which adjusts for shifts in consumption patterns, rose 0.5%, the first increase since July.  Less food and energy, chained prices rose 0.2% after two months of 0.3% decline.

The consumer price data is available in Haver's USECON database while detailed figures can be found in the CPIDATA database.

House Prices and Bank Loan Performance from the Federal Reserve Bank of San Francisco can be found here.

Labor Supply Responses to Changes in Wealth and Credit also from the Federal Reserve Bank of San Francisco is available here

Consumer Price Index (%) January December Y/Y  2008 2007 2006
Total  0.3 -0.8 -0.2 3.8 2.9 3.2
Total less Food & Energy 0.2 0.0 1.7 2.3 2.3 2.5
  Goods less Food & Energy 0.1 -0.2 -0.5 0.1 -0.4 0.2
    Services less Energy 0.2 0.1 2.5 3.1 3.4 3.4
  Energy 1.7 -9.3 -21.1 13.5 5.7 11.0
  Food & Beverages 0.1 0.1 5.2 5.4 3.9 2.3
Chained CPI: Total (NSA)  0.5 -1.3 -0.5 3.3 2.5 2.9
 Total less Food & Energy  0.2 -0.3 1.2 2.0 2.0 2.2
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