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Economy in Brief

U.S. CPI Decline Reflects Lower Energy Costs; Core Prices Rise Minimally
by Tom Moeller  September 16, 2015

The Consumer Price Index eased 0.1% during August (+0.2% y/y) and reversed the prior month's increase. It was the first shortfall since a 0.7% decline in January. Prices excluding food & energy notched 0.1% higher (1.8% y/y) for a second month. No change in the total and a 0.2% rise in core prices were expected in the Action Economics Forecast Survey.

A 2.0% fall (-15.0% y/y) in energy prices was the first decline since April. The easing was paced by an 8.1% drop (NSA) in fuel oil prices which are down more than one-third y/y. Gasoline prices followed with a 4.1% drop (-23.3% y/y) following three months of increase. Natural gas prices countered these declines with a 1.2% gain (-11.5% y/y) which reversed the prior month's decline. Electricity costs moved 0.3% higher (-0.6% y/y).

Food prices rose 0.2% (1.5% y/y) for a second straight month. Egg prices jumped 7.7% (35.3% y/y) while fruit & vegetable prices gained 1.5% (0.1% y/y). Seafood prices firmed 1.3% (-1.5% y/y) but meat prices declined 0.4% (0.3% y/y). Cereal & bakery product prices eased 0.1% (+1.1% y/y).

Goods prices other than food & energy slipped 0.1% (-0.5% y/y) for the fourth straight month. Prices have fallen a 0.1% rate so far this year after last year's 0.3% decline. Household furnishings & supplies prices declined 0.4% (-1.4% y/y), the fourth consecutive monthly shortfall while appliance prices eased 0.2% (-3.5% y/y). Recreational product prices continued lower by 0.4% (-2.6% y/y) and new vehicle prices eased minimally (+0.6% y/y). To the upside, apparel prices gained 0.3% (-0.9% y/y) for a second straight month as medical care goods prices rose 0.3% (3.4% y/y) as well. Educational book & supply prices improved 0.2% (4.7% y/y).

Services prices less energy ticked 0.1% higher (2.6% y/y), the weakest performance in six months. Shelter prices led the latest gain with a 0.2% rise (3.1% y/y). The cost of lodging away from home eased 0.6% (+1.7% y/y) but primary residence rents improved 0.3% (3.6% y/y). Owners' equivalent rent of primary residence gained 0.2% (3.0% y/y). Recreation services prices eased slightly (+2.5% y/y) and medical care services costs also slipped a bit (+2.2% y/y). The cost of using public transportation declined 1.7% (-2.9% y/y). Tuition & other school fees costs eased slightly as well (+3.5% y/y), the first decline since July of last year.

Minimal inflation readings left real average hourly earnings growing 0.5% (2.0% y/y), the largest monthly rise since January.

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, All Urban Consumers (%) Aug Jul Jun Aug Y/Y 2014 2013 2012
Total -0.1 0.1 0.3 0.2 1.6 1.5 2.1
Total less Food & Energy 0.1 0.1 0.2 1.8 1.7 1.8 2.1
  Goods less Food & Energy -0.1 -0.1 -0.1 -0.5 -0.3 -0.0 1.3
  Services less Energy 0.1 0.2 0.3 2.6 2.5 2.4 2.4
 Food 0.2 0.2 0.3 1.6 2.4 1.4 2.6
 Energy -2.0 0.1 1.7 -15.0 -0.3 -0.7 0.9
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