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Economy in Brief

U.S. CPI Gains With Energy
by Tom Moeller  April 15, 2011

Higher energy prices raised March inflation as they did in February. The Commerce Department indicated that the Consumer Price Index rose 0.5% in March following a like gain in February. The increase matched Consensus expectations. The y/y price rise of 2.7% was the strongest since December 2009 and the three-month increase of 6.1% (AR) was the firmest since mid-2008. Core price inflation showed less forward momentum. The CPI less food & energy rose 0.1% but the gain fell short of an expected 0.2% rise. Nevertheless, the y/y increase of 1.2% was the firmest since last February and the 2.0% three-month increase was the strongest since late-2009.

Energy prices again led with a 3.5% increase. Home heating oil prices increased 6.2% (34.0% y/y) while gasoline prices rose 5.6% (27.5% y/y). Prices for natural gas & electricity ticked up 0.2% but fell 0.5% y/y. Food & beverage prices rose a strong 0.7%. The gain was raised by a 1.1% increase in meat, poultry, fish & eggs (7.9% y/y) and by a 1.3% gain (3.7% y/y) in dairy products.

For goods alone, core prices rose 0.1% led by a 0.8% increase in motor vehicles (1.3% y/y). Apparel prices fell 0.5% (-0.6% y/y) for the second down month while prices for household furnishings & operation slipped 0.1% (-1.6% y/y).

Pricing power for core services improved again, posting a 0.2% (1.6% y/y) increase. Higher public transportation costs continued to lead with a 1.3% increase (10.5% y/y). Education costs rose 0.3% (4.0% y/y) while medical care service prices ticked up 0.1% (2.7% y/y). Shelter costs, which are 32% of the CPI, rose 0.1% for the sixth straight month and the y/y change improved to 0.9% due to declines early last year. Owners equivalent rent of primary residences, a measure not equivalent to other house price measures, again nudged up 0.1% while the y/y increase improved to 0.8% 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, jumped 0.9% and 2.5% year-to-year. Chained prices less food & energy increased 0.3% m/m and by 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. The expectations figure is the AS1REPNA database.

Consumer Price Index (%) Mar Feb Jan Mar Y/Y 2010 2009 2008
Total 0.5 0.5 0.4 2.7 1.6 -0.3 3.8
Total less Food & Energy 0.1 0.2 0.2 1.2 1.0 1.7 2.3
  Goods less Food & Energy 0.1 0.2 0.2 0.2 1.1 1.3 0.1
  Services less Energy 0.2 0.2 0.1 1.6 0.9 1.9 3.1
 Energy 3.5 3.4 2.1 15.5 9.6 -18.2 13.7
 Food & Beverages 0.7 0.5 0.5 2.9 0.8 1.9 5.4
Chained CPI: Total (NSA) 0.9 0.5 0.5 2.5 1.5 -0.1 3.7
 Total less Food & Energy 0.3 0.4 0.1 0.9 0.7 1.5 2.0
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