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Economy in Brief

U.S. Consumer Price Index Reflects Broad-Based Strength
by Tom Moeller  June 17, 2014

Consumer prices increased 0.4% (2.1% y/y) in May, the largest increase since February 2013. The reading easily beat consensus expectations for a 0.2% rise in the Action Economics Forecast Survey. Consumer prices excluding food and energy jumped 0.3% in May (2.0% y/y), the strongest increase since August 2011, and above consensus expectations for a 0.2% gain.

Strengthened energy prices paced the pickup in pricing power with a 0.9% increase. Electricity prices led the gain with a 2.3% rise (3.6% y/y) which recovered a 2.6% April decline. Gasoline prices followed with a 0.7% rise (2.3% y/y) after a 2.3% increase. Offsetting some of this strength was a 1.7% drop (+7.3% y/y) in natural gas prices which followed a 0.3% rise. Also down were fuel oil prices by 1.4% (+5.3 y/y), off for the third straight month.

Food prices also were strong and rose 0.5% (2.5% y/y), the strongest increase since August 2011. Higher egg prices led the gain with a 2.7% rise (10.1% y/y). Meat prices weren't far behind with a 1.1% increase (9.4% y/y). Fruit & vegetable prices also gained 1.1% 3.2% y/y) but cereal prices slipped 0.1% (-0.2% y/y). Nonalcoholic beverage prices increased 0.4% (-0.9% y/y).

Core services prices gained 0.3% (2.7% y/y) for the third consecutive month. Transportation services led the increase with a 1.0% rise (3.1% y/y) paced by a 3.7% jump (3.1% y/y) in public transportation. Shelter costs (32% of the CPI) increased 0.3% (2.8% y/y), reflecting a 0.2% rise (2.6% y/y) in owners equivalent rent of primary residences. Medical care services prices were up 0.3% (3.0% y/y). Physicians' services led the gain with a 0.4% rise (1.7% y/y). Tuition costs increased 0.3% (3.4% y/y) following monthly increases of 0.4% and 0.5% earlier this year. Recreation services prices ticked 0.1% higher (2.2% y/y).

Consumer prices for goods less food and energy ticked 0.1% higher (-0.2% y/y), though they were regularly declining m/m as recently as March. Medical care commodity prices increased 0.5% (2.5% y/y) and apparel prices gained 0.3% (0.7% y/y). Appliance prices declined 1.7% (-5.3% y/y) but furniture & bedding prices increased 0.1% (-2.5% y/y). New vehicle prices rose 0.2% (0.5% 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 from Action Economics and is found in the AS1REPNA database.

Consumer Price Index (%) May Apr Mar May Y/Y 2013 2012 2011
Total 0.4 0.3 0.2 2.1 1.5 2.1 3.2
Total less Food & Energy 0.3 0.2 0.2 2.0 1.8 2.1 1.7
  Goods less Food & Energy 0.1 0.1 0.0 -0.2 -0.0 1.3 1.3
  Services less Energy 0.3 0.3 0.3 2.7 2.4 2.4 1.8
 Food 0.5 0.4 0.4 2.5 1.4 2.6 3.7
 Energy 0.9 0.3 -0.1 3.4 -0.7 0.9 15.2
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