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Economy in Brief

U.S. CPI Slips As Energy Prices Decline; Core Picks Up
by Tom Moeller  December 16, 2011

There's still little pricing power in the U.S. economy. The November Consumer Price Index slipped marginally following a slight October decline. The decline compared with expectations for a 0.1% uptick. Consumer prices less food & energy were slightly firmer and rose 0.2% following two consecutive 0.1% upticks. The gain was firmer than expectations for a 0.1% uptick. Over several months, price inflation still looks contained. On a three-month basis, the CPI is up at a 0.8% annual rate and that's lower than its April peak of 6.2%. Core inflation was 1.5% over the last three months, down as well from its 3.1% July peak.

Energy prices led the CPI lower last month with a 1.6% decline (+12.4% y/y). Gasoline prices fell 2.4% (+19.7% y/y) following a 3.1% October drop. Fuel oil prices, however, rose a not seasonally adjusted 2.3% (19.7% y/y). Food & beverage prices rose 0.1% for the second consecutive month but the 4.4% y/y gain remained the strongest since early-2009. Strength continued in dairy products (8.7% y/y), meats (6.9% y/y) and cereal products (6.2% y/y).

For goods alone, core prices rose 0.1% after two months of decline. Apparel prices rose 0.6% (4.8% y/y) while motor vehicle prices fell 0.3% (+3.2% y/y). Household furnishings & operations prices were unchanged (0.8% y/y).

Core service prices rose 0.2% (2.1% y/y) for the fifth straight month. Education costs were strong and rose 0.5% (4.7% y/y) and medical care service prices also rose 0.5% (3.5% y/y). Shelter costs, which are 32% of the CPI, rose 0.2% but the y/y change held at 1.8% versus its 0.4% dip last year. Owners equivalent rent of primary residences, a measure not equivalent to other house price measures, edged up 0.1%. The 1.7% y/y increase is up from its lowest of no-change for all of last year. Public transportation prices rose 0.1% (5.3% y/y) while recreation costs also inched up 0.1% (0.3% y/y).

The chained CPI, which adjusts for shifts in consumption patterns, fell 0.1% (+3.2% y/y). Chained prices less food & energy was unchanged m/m (1.9% 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.

Consumer Price Index (%) Nov Oct Sep Nov Y/Y 2010 2009 2008
Total -0.0 -0.1 0.3 3.4 1.6 -0.3 3.8
Total less Food & Energy 0.2 0.1 0.1 2.2 1.0 1.7 2.3
  Goods less Food & Energy 0.1 -0.1 -0.2 2.2 1.1 1.3 0.1
  Services less Energy 0.2 0.2 0.2 2.1 0.9 1.9 3.1
 Food & Beverages 0.1 0.1 0.4 4.4 0.8 1.9 5.4
 Energy -1.6 -2.0 2.0 12.4 9.6 -18.2 13.7
Chained CPI: Total (NSA) -0.1 -0.2 0.1 3.2 1.5 -0.1 3.7
 Total less Food & Energy 0.0 0.2 0.2 1.9 0.7 1.5 2.0
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