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Economy in Brief

U.S. CPI Inches Higher
by Tom Moeller  December 15, 2010

Heightened competition continued to restrain pricing power last month. That again was clear in the November report on the Consumer Price Index which ticked up only 0.1% after a 0.2% rise during October. The gain was lower than Consensus expectations for a 0.2% rise. During the last twelve months, the CPI rose 1.1% following the 0.3% decline during all of last year.

Core consumer pricing power remained weak as prices excluding foods & fuel inched up 0.1% following three months of being unchanged. The rise met expectations. That left the y/y gain at 0.7%, near the least since the series began in 1957. Core goods prices fell 0.1%, down for the third consecutive month and 0.2% y/y, despite a 5.0% 12-month rise in tobacco prices. New and used motor vehicle prices slipped for the third straight month but they've risen 1.0% y/y while prices of home furnishings & operation have fallen 2.5% since last year. Apparel prices rose 0.2% (-0.8% y/y) after three months of decline.

Pricing power for core services also showed little strength this year. Prices rose just 0.2% last month and 1.0% y/y. To the upside, public transportation costs led last month's gain and surged 2.1% (4.4% y/y) after last year's 5.6% decline. Medical care was another area of strength posting a 0.1% November increase and 3.4% y/y. Finally, education costs also were strong and rose 3.8% y/y after a 5.3% increase last year. Lower shelter costs, which are 32% of the CPI, offset this strength and fell 0.1% y/y. Owners equivalent rent of primary residences, a measure not equivalent to other house price measures, ticked up 0.2% after a 1.7% gain in 2009. These latest readings are the weakest since the series' start in 1983.

Energy prices were also restrained last month. They rose just 0.2% during November and 3.9% y/y. A 0.7% increase (7.3% y/y) in gasoline prices was accompanied by a 0.7% decline (-0.9% y/y) in natural gas & electricity prices. Fuel oil prices rose 3.5% (NSA) last month and 10.0% y/y. Food & beverage prices rose 0.2% last month and 1.5% y/y. Strength in meat, poultry, fish & eggs (5.9% y/y) and dairy products (3.8% y/y) has been offset by stable fruit & vegetable and cereal prices. The cost of eating out rose 1.3% y/y after a 3.5% 2009 gain.

The chained CPI, which adjusts for shifts in consumption patterns, was unchanged and up 1.0% year-to-year. Chained prices less food & energy slipped m/m and rose 0.5% y/y.

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

Consumer Price Index (%) Nov Oct Sept Nov Y/Y 2009 2008 2007
Total 0.1 0.2 0.1 1.1 -0.3 3.8 2.9
Total less Food & Energy 0.1 -0.0 0.0 0.7 1.7 2.3 2.3
  Goods less Food & Energy -0.1 -0.2 -0.2 -0.2 1.3 0.1 -0.4
  Services less Energy 0.2 0.1 0.1 1.0 1.9 3.1 3.4
 Energy 0.2 2.6 0.7 3.9 -18.1 13.7 5.6
 Food & Beverages 0.2 0.1 0.3 1.5 1.9 5.4 3.9
Chained CPI: Total (NSA)  0.0 0.2 0.1 1.0 -0.1 3.7 2.5
 Total less Food & Energy  -0.0 0.1 0.1 0.5 1.5 2.0 1.9
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