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Economy in Brief

U.S. CPI Strengthens, Both Total and Core
by Tom Moeller  July 17, 2015

The consumer price index increased 0.3% during June (0.1% y/y) following an unrevised 0.4% May gain. Prices excluding food & energy improved 0.2% (1.8% y/y) after a 0.1% rise. Both increases matched expectations in the Action Economics Forecast Survey.

Higher energy prices provided strength to last month's overall CPI with a 1.7% jump, though they've fallen 15.0% y/y. Gasoline prices surged 3.4% (-23.3% y/y) to the highest level this year. Fuel oil prices, however, declined 1.9% (NSA, -27.7% y/y). Natural gas prices edged 0.3% higher (-13.0% y/y) and household electricity prices improved 0.2% and were roughly unchanged y/y. Food prices improved 0.3% (1.8% y/y) after remaining unchanged for two months. An 18.3% jump (21.8% y/y) in egg prices led the gain while cereal & bakery product costs improved 0.5% (1.3% y/y). Meat prices increased 0.3% (3.4% y/y) after three months of decline but fruit & vegetable prices declined 1.4% (-2.1% y/y).

Core service price inflation recovered as with a 0.3% rise (2.5% y/y) after easing slightly in May. The 3.4% increase (AR) during the last three months was the strongest rise since mid-2008. Shelter costs rose 0.3% (3.0% y/y), raising growth so far this year to 3.2% from 2.8% last year. Owners' equivalent rent of primary residences jumped 0.4% (3.5% y/y). That pulled this year's rise to an annualized 3.3%, the firmest six month increase since March 2007. Public transportation costs also were firm, posting a 1.4% increase (-3.2% y/y) after a 3.4% gain. Recreation services prices improved 0.4% (2.1% y/y) on the heels of two months of 0.3% rise. Tuition, child care and other school fees jumped 0.6% (3.7% y/y), lifting six-month growth to 5.0% (AR), the most since March 2009. Medical care costs slipped 0.2% (+2.3% y/y) following a 0.2% rise.

Goods prices other than food & energy eased 0.1% (-0.4% y/y) for the second straight month. Prices have only risen at a 0.4% rate so far this year and reversed last year's 0.3% decline. Household furnishings & supplies prices declined 0.3% (-1.3% y/y) after a 0.4% drop. Educational books & supplies also fell 0.3% but they're up 5.2% y/y. Appliance prices eased 0.1% (-2.6% y/y) after a 0.2% decline. Apparel costs also slipped 0.1% (-1.8% y/y), down for the third straight month. Used vehicle prices softened 0.4% (-0.7% y/y) for a second straight month and recreational goods prices continued lower by 0.1% (-2.9% y/y). These declines were offset by a 0.1% increase (1.2% y/y) in new vehicle prices which have risen at a 1.4% rate so far this year after last year's 0.3% rise. The big standout was a 0.8% rise (2.5% y/y) in tobacco & smoking product prices.

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 2014 2013 2012
Total 0.3 0.4 0.1 0.1 1.6 1.5 2.1
Total less Food & Energy 0.2 0.1 0.3 1.8 1.7 1.8 2.1
  Goods less Food & Energy -0.1 -0.1 0.1 -0.4 -0.3 -0.0 1.3
  Services less Energy 0.3 0.2 0.3 2.5 2.5 2.4 2.4
 Food 0.3 0.0 -0.0 1.8 2.4 1.4 2.6
 Energy 1.7 4.3 -1.3 -15.0 -0.3 -0.7 0.9
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