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Economy in Brief

U.S. Consumer Price Inflation Touches Five-Month Low
by Tom Moeller  August 19, 2014

The consumer price index ticked 0.1% higher (2.0% y/y) during July following a 0.3% June gain. The reading was the easiest increase since February and matched consensus expectations in the Action Economics Forecast Survey. Consumer prices excluding food and energy also ticked 0.1% higher (1.9% y/y) and fell short of expectations for a 0.2% increase.

Core service price pressure remained contained as prices posted a second consecutive 0.1% uptick (2.6% y/y). Transportation services prices declined 0.7% (+1.8% y/y) following a 0.1% uptick in June. A 4.0% decline (-0.0% y/y) in public transportation costs led the weakness following a 0.3% June rise. Medical care service price inflation followed this weakness with a meek 0.1% rise (2.5% y/y) after no change in June. Physician services costs fell 0.2% (+1.1% y/y), down for the second straight month. Tuition fees also gained 0.1% (3.4% y/y) following a 0.5% jump. Recreation services prices rose 0.2% (2.3% y/y) while shelter costs (32% of the CPI) advanced 0.3% (2.9% y/y) for the second time in three months. Owners equivalent rent of primary residences improved 0.3% (2.7% y/y) following three consecutive 0.2% increases.

Still showing weakness were goods less food and energy prices which were unchanged (-0.3% y/y). They've held steady since December. To the strong-side were new vehicle prices, up 0.3% (0.2% y/y) but that just reversed a June decline. Medical care commodity prices also gained 0.3% (3.0% y/y) after a 0.7% jump. In addition, appliance prices rose 0.3% (-4.2% y/y), the first increase in nine months. Apparel prices improved 0.2% (0.5% y/y) after a 0.5% rise. To the downside, furniture & bedding prices declined 1.3% (-3.1% y/y) after three months of modest increase. Audio & video product prices were off a record 1.9% (-7.9% y/y) and information technology product prices fell 0.4% (-5.5% y/y).

Also under control were energy prices which declined 0.3% (+2.5% y/y) after the 1.6% jump during June. Gasoline prices fell 0.3% (+0.8% y/y) following a 3.3% surge. Electricity prices also were off 0.3% (+4.0% y/y) after a 0.2% gain. Natural gas prices fell 0.4% (+6.9% y/y), down for the third straight month, while fuel oil prices dropped 0.7% (+2.2% y/y), a fifth consecutive monthly decline.

Food prices strengthened 0.4% (2.6% y/y) after an easier 0.1% uptick. Nonalcoholic beverage costs increased 0.5% (-0.1% y/y) following no change. Cereal and bakery product prices rose 0.4% (0.3% y/y) after three months of decline. Meat prices gained 0.3% (9.3% y/y) for a second month. Dairy prices rose 0.3% (4.3% y/y) following a 0.4% drop while fruit & vegetable prices were unchanged (2.0% y/y) following a 0.3% decline.

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 (%) Jul Jun May Jul Y/Y 2013 2012 2011
Total 0.1 0.3 0.4 2.0 1.5 2.1 3.2
Total less Food & Energy 0.1 0.1 0.3 1.9 1.8 2.1 1.7
  Goods less Food & Energy -0.0 0.1 0.1 -0.3 -0.0 1.3 1.3
  Services less Energy 0.1 0.1 0.3 2.6 2.4 2.4 1.8
 Food 0.4 0.1 0.5 2.6 1.4 2.6 3.7
 Energy -0.3 1.6 0.9 2.5 -0.7 0.9 15.2
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