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Economy in Brief

U.S. Consumer Prices Moderate; Services Price Pressures Ease
by Tom Moeller  July 22, 2014

Consumer prices gained 0.3% (2.1% y/y) during June following a strong 0.4% May rise. The reading matched consensus expectations in the Action Economics Forecast Survey. Consumer prices excluding food and energy ticked 0.1% higher (1.9% y/y) and fell short of expectations for a 0.2% gain.

Pressure from core services prices eased in June with a 0.1% increase (2.7% y/y), the weakest rise in six months. Transportation services prices gained just 0.1% (3.1% y/y) following a 1.0% May rise. This easing occurred as public transportation costs increased 0.3% (3.5% y/y) on the heels of a 3.7% jump. Shelter costs (32% of the CPI) advanced 0.2% (2.8% y/y) after a 0.3% rise. Moderation came as lodging costs away from home fell 1.9% (+3.0% y/y) and fully reversed May's increase. Owners equivalent rent of primary residences rose a steady 0.2% (2.6% y/y). Pressure from medical care services prices also softened. They were unchanged (2.6% y/y) following three months of 0.3% increase. Physicians' services led the reversal with a 0.3% decline (+1.1% y/y) after a 0.4% rise. Still firm were tuition costs which increased 0.5% (3.6% y/y), the strongest gain in four months. Recreation services prices also posted an improved 0.2% rise (2.2% y/y).

Earlier strength in food prices also moderated as they ticked up just 0.1% (2.4% y/y), the weakest rise in five months. Meat prices gained a lessened 0.2% (7.5% y/y) following four consecutive months of 1.0%-plus increases. Fruit & vegetable prices declined 0.3% (+3.0% y/y) following four months of strong increase. Cereal prices declined 0.2% (-0.3% y/y), down for the third straight month. Nonalcoholic beverage prices were unchanged (-1.0% y/y) after a 0.4% rise.

On the strong side were energy prices which gained 1.6% (3.1% y/y) after May's 0.9% rise. Gasoline prices jumped 3.0% (2.1% y/y) following two months of lesser increase. Electricity prices notched 0.2% higher (4.2% y/y) after a 2.3% jump. Offsetting some of this strength was a 2.6% drop (+5.1% y/y) in natural gas prices after a 1.7% fall and a 1.7% decline (+4.0% y/y) in fuel oil prices, off for the fourth straight month.

Still showing negligible increase were goods less food and energy prices, up 0.1% (-0.2% y/y) for the third straight month. To the strong side, medical care commodity prices jumped 0.7% (2.8% y/y), the largest monthly increase since January 2007. Apparel prices also were strong for the third month in the last four, posting a 0.5% rise (0.9% y/y). Furniture & bedding prices increased 0.2% (-2.5% y/y) after a 0.1% uptick but appliance costs slipped 0.1% (-5.4% y/y) following two months of sizable decline. New vehicle prices declined 0.3% (-0.0% y/y) after a 0.2% increase. Audio & video product prices were off 1.3% (-6.8% y/y), the largest decline since early-2012.

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 (%) Jun May Apr Jun Y/Y 2013 2012 2011
Total 0.3 0.4 0.3 2.1 1.5 2.1 3.2
Total less Food & Energy 0.1 0.3 0.2 1.9 1.8 2.1 1.7
  Goods less Food & Energy 0.1 0.1 0.1 -0.2 -0.0 1.3 1.3
  Services less Energy 0.1 0.3 0.3 2.7 2.4 2.4 1.8
 Food 0.1 0.5 0.4 2.4 1.4 2.6 3.7
 Energy 1.6 0.9 0.3 3.1 -0.7 0.9 15.2
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