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Economy in Brief

U.S. CPI Increase Moderates in May; Core Picks Up
by Tom Moeller   June 15, 2011

The good news about today's reported 0.2% increase in the May CPI was that it was the smallest monthly gain since November. The discouraging part of the report was that less food & energy, the 0.3% increase was the firmest since 2008. The increases compared to expectations for a 0.1% uptick in the total and a 0.2% rise in the core. On a three-month basis, prices rose at a 4.6% annual rate, also the firmest since mid-2008. Core price inflation picked up as well. The CPI less food & energy rose 0.3% and 2.5% on a three-month basis, the strongest since April, 2009.

Energy prices overall fell 1.0% last month as gasoline prices dropped 2.0% (+36.9% y/y). Food & beverage costs rose another 0.4% (3.4% y/y), the strongest increase since April 2009. The gain was raised by a 1.5% rise (8.5% y/y) in meats, poultry & fish and a  0.8% increase (6.9% y/y) in dairy prices.

For goods alone, core prices rose an accelerated 0.5% led by a 1.2% increase (1.0% y/y) in apparel and a 1.0% rise (3.1% y/y) in vehicle prices. 

Core service prices gained 0.2% (1.6% y/y) last month. Education costs rose 0.4% (3.9% y/y) while medical care service prices rose another 0.3% (3.0% y/y). Public transportation costs fell 0.5% (+7.2% y/y). Shelter costs, which are 32% of the CPI, rose 0.2% after seven consecutive months of 0.1% increase and the y/y change rose to 1.1%. Owners equivalent rent of primary residences, a measure not equivalent to other house price measures, again nudged up 0.1% (0.9% y/y). The reading remained nearly the weakest since the series' start in 1983.

The chained CPI, which adjusts for shifts in consumption patterns, jumped another 0.6% and 3.3% year-to-year. Chained prices less food & energy increased 0.2% m/m and by 1.3% 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.

Where is an Oil Shock? from the Federal Reserve Bank of St. Louis and it is available here.

Consumer Price Index (%) May Apr Mar May Y/Y 2010 2009 2008
Total 0.2 0.4 0.5 3.4 1.6 -0.3 3.8
Total less Food & Energy 0.3 0.2 0.1 1.5 1.0 1.7 2.3
  Goods less Food & Energy 0.5 0.4 0.1 1.2 1.1 1.3 0.1
  Services less Energy 0.2 0.1 0.2 1.6 0.9 1.9 3.1
 Energy -1.0 2.2 3.5 20.7 9.6 -18.2 13.7
 Food & Beverages 0.4 0.4 0.7 3.4 0.8 1.9 5.4
Chained CPI: Total (NSA) 0.4 0.6 0.9 3.3 1.5 -0.1 3.7
 Total less Food & Energy 0.2 0.2 0.3 1.3 0.7 1.5 2.0
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