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Economy in Brief

U.S. CPI Firms Again
by Tom Moeller  March 17, 2011

Broad-based improvement in pricing power continued last month. The Consumer Price Index rose 0.5% in February following 0.4% gains during the prior two months. The rise beat Consensus expectations for a 0.4% increase. The y/y gain of 2.2% was the strongest since March of last year and the three-month increase of 5.6% (AR) was the firmest since mid-2008. Core price inflation also has improved, but more modestly. The CPI less food & energy rose 0.2% versus Consensus expectations for a 0.1% uptick. The y/y gain of 1.1% was the firmest since last March and the 1.8% three-month was the strongest since late-2009.

Energy prices led last month's gain with a 3.4% increase. Gasoline prices gained 4.7% (19.2% y/y) while home heating oil prices rose 4.1% (NSA, 17.9% y/y). Prices for natural gas & electricity increased 1.1% and by 0.2% y/y. Food & beverage prices rose another 0.5%. The gain was backed by a 2.2% jump in fruit & vegetable prices (4.3% y/y) and a 1.2% increase in meat, poultry, fish & eggs (6.9% y/y).

Core consumer pricing power posted a second 0.2% increase. For goods alone prices rose 0.2%, also for the second month, led by a 0.5% increase (0.5% y/y) in motor vehicles. Prices for household furnishings & operation ticked up 0.1% (-1.9% y/y) but apparel prices fell 0.9% (-0.4% y/y).

Pricing power for core services also improved slightly to 0.2% (1.5% y/y). To the upside, public transportation costs again led the gain with a 1.9% increase (9.7% y/y). Education costs were strong and posted a 0.4% increase (4.1% y/y) while medical care service prices also rose 0.4% (3.0% y/y). Shelter costs, which are 32% of the CPI, rose 0.1% for the fifth straight month; however, the y/y change improved to 0.8% due to declines early last year. Owners equivalent rent of primary residences, a measure not equivalent to other house price measures, ticked up 0.1% while the y/y increase improved to 0.6% after no change last year. Nevertheless, the reading remained nearly the weakest since the series' start in 1983.

The chained CPI, which adjusts for shifts in consumption patterns, rose 0.5% and 2.0% year-to-year. Chained prices less food & energy jumped 0.4% m/m and rose 0.9% 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 (%) Feb Jan Dec Feb Y/Y 2010 2009 2008
Total 0.5 0.4 0.4 2.2 1.6 -0.3 3.8
Total less Food & Energy 0.2 0.2 0.1 1.1 1.0 1.7 2.3
  Goods less Food & Energy 0.2 0.2 -0.1 -0.0 1.1 1.3 0.1
  Services less Energy 0.2 0.1 0.1 1.5 0.9 1.9 3.1
 Energy 3.4 2.1 4.0 11.2 9.6 -18.2 13.7
 Food & Beverages 0.5 0.5 0.1 2.2 0.8 1.9 5.4
Chained CPI: Total (NSA) 0.5 0.5 0.2 2.0 1.5 -0.1 3.7
 Total less Food & Energy 0.4 0.1 -0.2 0.9 0.7 1.5 2.0
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