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Economy in Brief

U.S. CPI Jumps With Energy Costs
by Tom Moeller  January14, 2011

Higher energy and tobacco prices dominated last month's CPI figures. The Consumer Price Index rose 0.5% after a 0.1% rise during November. The gain roughly equaled Consensus expectations for a 0.4% rise. During all of 2010, the CPI rose 1.6% following the 0.3% decline during last year. The December-to-December gain was 1.5%.

Energy prices surged 4.6% last month and by nearly ten percent during the year. Home heating oil prices led the increase. They jumped 4.1% (NSA, 13.5% y/y) while gasoline prices surged 8.5% for the month and by 13.9% from 12-months earlier. Prices for natural gas & electricity rose 0.5% but slipped 0.1% during the year. Food & beverage prices inched up 0.1% last month and 1.5% y/y. Strength in meat, poultry, fish & eggs (5.5% y/y) and dairy products (3.7% y/y) was offset by a weak 1.4% gain in fruit & vegetable prices. The cost of eating out rose 1.3% y/y after a 3.5% gain during 2009.

Core consumer pricing power remained weak. Prices excluding foods & fuel again inched up 0.1% following three months of being roughly unchanged. The rise equaled expectations. That left the 12-month gain of 0.8% near the least since the series began in 1957. Core goods prices slipped marginally, down for the fourth consecutive month and down 0.3% y/y, despite a 5.6% rise in tobacco prices. New and used motor vehicle prices also slipped for the fourth straight month but they've risen a modest 0.7% y/y. Prices of home furnishings & operation have been falling since the middle of 2009 and ended last year down 2.5%. Apparel prices rose 0.1% in December (-1.1% y/y) after a 0.2% November increase. Tobacco prices were the only other area of strength and posted a 0.8% December rise (5.6% y/y).

Pricing power for core services also showed little strength last year. Prices rose inched up just 0.1% last month and a stable 1.0% y/y. To the upside, public transportation costs led last month's gain and surged another 1.7% (4.9% y/y) after the 2009 increase of 3.1%. Medical care was another area of strength posting a 0.3% December increase and 3.4% y/y. Finally, education costs also were strong and rose 3.9% y/y after a 4.7% twelve-month 2009 increase. Lower shelter costs, which are 32% of the CPI, offset this strength and were unchanged y/y. Owners equivalent rent of primary residences, a measure not equivalent to other house price measures, ticked up 0.3% after a 0.7% twelve-month gain in 2009. These latest readings are the weakest since the series' start in 1983.

The chained CPI, which adjusts for shifts in consumption patterns, rose 0.2% and 1.4% year-to-year. Chained prices less food & energy slipped 0.2 m/m but 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 (%) Dec Nov Oct Dec Y/Y 2010 2009 2008
Total 0.5 0.1 0.2 1.5 1.6 -0.3 3.8
Total less Food & Energy 0.1 0.1 -0.0 0.8 1.0 1.7 2.3
  Goods less Food & Energy -0.0 -0.1 -0.2 -0.3 1.1 1.3 0.1
  Services less Energy 0.1 0.2 0.1 1.0 0.9 1.9 3.1
 Energy 4.6 0.2 2.6 7.9 9.6 -18.1 13.7
 Food & Beverages 0.1 0.2 0.1 1.5 0.8 1.9 5.4
Chained CPI: Total (NSA) 0.2 0.0 0.2 1.4 1.6 -0.1 3.7
 Total less Food & Energy -0.2 -0.0 0.1 0.5 0.6 1.5 2.0
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