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Economy in Brief

U.S. CPI Increase Matches Expectations But Y/Y Is Strong
by Tom Moeller   October 19, 2011

The overall CPI gained an expected 0.3% during September following a 0.4% August rise. The y/y increase of 3.9% was the strongest since September, 2008. Higher food & energy prices bloated the monthly increase; thus the rise in the "core" CPI was a minimal and less than expected 0.1%. Here again, however, the y/y gain of 2.0% was the strongest since November, 2008.

Higher energy prices again led last month's CPI increase with a 2.0% rise. Gasoline prices rose 2.9% and by one-third y/y. Food & beverages were again strong, up 0.4%, and the y/y increase of 4.5% remained the strongest since early-2009. Strength was widespread as dairy product prices rose 1.2% (10.2% y/y), cereal prices jumped 0.9% (5.6% y/y) and prices of meats, poultry & fish increased another 0.4% (7.5% y/y).

For goods alone, core price inflation eased last month. The 0.2% decline (+2.0% y/y) was led by a 1.1% drop (+3.5% y/y) in apparel prices. This decline was accompanied by a 0.2% dip (+3.6% y/y) in motor vehicle prices. Furniture prices were roughly unchanged (0.4% y/y) for the third month in the last four.

Core service prices rose 0.2% (2.0% y/y) for the third straight month. Public transportation costs were strongest and rose 0.8% (7.4% y/y). Education costs rose 0.2% (4.4% y/y) but that y/y gain remained below the 6%-to-7% increases in the early-2000s. Medical care service prices rose 0.2% (2.8% y/y), easier than the five previous months of 0.3% increase. Shelter costs, which are 32% of the CPI, ticked up 0.1% and the y/y change remained low at 1.7%. Owners equivalent rent of primary residences, a measure not equivalent to other house price measures, also ticked up just 0.1% but the 1.5% y/y increase is up from its lowest of no-change for all of last year.

The chained CPI, which adjusts for shifts in consumption patterns, rose 0.1% (3.7% y/y). Chained prices less food & energy rose 0.2% m/m and by 1.8% y/y.

The consumer price data is available in Haver's USECON database while detailed figures can be found in CPIDATA. The expectations figure is the AS1REPNA database.

The Fed's latest Beige Book covering regional economic conditions is available here.

Consumer Price Index (%) Sep Aug Jul Sep Y/Y 2010 2009 2008
Total 0.3 0.4 0.5 3.9 1.6 -0.3 3.8
Total less Food & Energy 0.1 0.2 0.2 2.0 1.0 1.7 2.3
  Goods less Food & Energy -0.2 0.4 0.3 2.0 1.1 1.3 0.1
  Services less Energy 0.2 0.2 0.2 2.0 0.9 1.9 3.1
 Energy 2.0 1.2 2.8 19.6 9.6 -18.2 13.7
 Food & Beverages 0.4 0.5 0.4 4.5 0.8 1.9 5.4
Chained CPI: Total (NSA) 0.1 0.3 0.1 3.7 1.5 -0.1 3.7
 Total less Food & Energy 0.2 0.3 0.1 1.8 0.7 1.5 2.0
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