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Economy in Brief

U.S. Consumer Prices Decline With Lower Fuel Costs; Core Prices Steady
by Tom Moeller  January 16, 2015

Consumer prices continued declining by the most in six years. The consumer price index fell 0.4% during December following an unrevised 0.3% fall during November. It was the largest monthly drop since December 2008 and matched expectations in the Action Economics Forecast Survey. Prices during the last twelve months fell 0.8% after a 1.5% rise during 2013. Energy prices pulled the total lower last month with a 4.7% decline (-10.6% y/y). Prices excluding food & energy were unchanged after a 0.1% rise. Expectations had been for a 0.1% uptick. For the last twelve months core prices increased 1.6% following a 1.7% rise in 2013.

Energy prices were pulled lower by a 9.4% drop in gasoline prices (-21.5% y/y). Prices have fallen 22.4% from their high six months ago. Fuel oil prices declined 7.8% (-19.1% y/y) but natural gas prices reversed the prior month's decline with a 1.5% gain (5.8% y/y). Electricity costs rose 0.8% (3.1% y/y).

Higher food prices continued to offset these declines, last month with a 0.3% rise (3.4% y/y). Egg prices jumped 5.5% (10.7% y/y) and dairy prices gained 0.6% (5.3% y/y). Fruit & vegetable cost strengthened 0.4% (3.2% y/y) while meat prices rose 0.3% (12.8% y/y). Cereal & bakery product prices rose 0.2% (0.5% y/y) but, to the downside, nonalcoholic beverage prices fell 0.4% (+0.7% y/y).

Prices for goods excluding food & energy declined 0.3% (-0.8% y/y), pulled down by a 1.2% fall in apparel costs (-2.0% y/y) and a 0.6% drop in appliance prices (-5.2% y/y). Recreation goods prices fell 0.3% (-2.6% y/y) and new vehicle prices slipped 0.1% (+0.5% y/y). These declines were countered by a 1.0% rise (4.8% y/y) in medical care goods prices and a 0.3% gain in furniture & bedding prices (-1.6% y/y).

Firming again were services prices by 0.1% (2.4% y/y). Medical care prices gained 0.3% (2.4% y/y) and tuition costs also rose 0.3% (3.2% y/y). Owners' equivalent rents of primary residence costs increased 0.2% (2.6% y/y). Recreation prices also improved 0.2% (1.5% y/y) but public transportation prices fell 3.1% (-2.9% 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 from Action Economics and is found in the AS1REPNA database.

Consumer Price Index (%) Dec Nov Oct Dec Y/Y 2014 2013 2012
Total -0.4 -0.3 0.0 0.8 1.6 1.5 2.1
Total less Food & Energy 0.0 0.1 0.2 1.6 1.7 1.8 2.1
  Goods less Food & Energy -0.3 -0.4 0.0 -0.8 -0.3 -0.0 1.3
  Services less Energy 0.1 0.2 0.3 2.4 2.5 2.4 2.4
 Food 0.3 0.2 0.1 3.4 2.4 1.4 2.6
 Energy -4.7 -3.8 -1.9 -10.6 -0.5 -0.7 0.9
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