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Economy in Brief

U.S. CPI Moderates Overall; Core Inflation Picks Up
by Tom Moeller  January 12, 2018

The Consumer Price Index ticked 0.1% higher (2.1% y/y) during December, moderating from a 0.4% November rise. Prices excluding food & energy accelerated, however, posting a 0.3% rise (1.8% y/y ). That's the strongest increase since January 2017. The overall CPI gain matched expectations in the Action Economics Forecast Survey. A 0.2% increase had been expected for prices excluding food & energy.

Pricing power in the core goods sector improved notably last month with a 0.2% gain (-0.7% y/y), only the third increase in about twelve months. The y/y change remained weak, however, at -0.7%. Medical care product prices surged 1.0% (2.3% y/y) and equaled the strong July rise. Appliance prices increased 0.5% last month (-1.0% y/y) and the y/y decline of 1.0% compared to -5.2% in 2014. New vehicle prices jumped 0.6% (-0.5% y/y) and used car prices surged 1.4% (-1.0% y/y). The cost of furniture improved 0.1% (-1.7% y/y) after ten months of decline. Prices of recreation goods remained under pressure posting a 0.4% drop (-3.4% y/y). Apparel prices were off 0.5% and the y/y decline of 1.6% was the weakest reading since 2015.

Service prices remained firm as they posted a 0.3% gain (2.6% y/y). Shelter prices rose 0.4% (3.2% y/y) as the cost of lodging away from home surged 0.8% (0.6% y/y). Owners' equivalent rents of primary residence gained 0.3% and a steady 3.2% y/y. Transportation services prices rose an improved 0.3% m/m, but the y/y change remained stable. Medical care services prices rose an improved 0.2%, but the y/y increase of 1.6% compared to 5.1% y/y in August of 2016. Public transportation costs held steady (-1.6% y/y). Recreation services prices rose an improved 0.3%, lifting 2017's rise to 3.8%, up from 2.9% y/y in 2016. Education costs rose 0.2%, with the 2.2% y/y rise the most moderate since the 2004 peak of 7.1%.

Food prices gained 0.2% (1.6% y/y), the strongest change since July. Meat, poultry & fish costs surged 0.7% with the 2.3% y/y gain up from -3.5% in 2016. Egg prices jumped 3.8% (11.6% y/y). Cereal & bakery product prices gained 0.2% but continued to decline by a steady -0.6% y/y. Dairy & related product prices declined 0.4% and were down a lessened 0.5% y/y. Fruit & vegetable prices declined 0.2%, and the 1.5% y/y rise compared to a 2016 decline of 2.4%. Nonalcoholic beverages prices eased 0.1% and were unchanged y/y compared to a 0.4% in 2016. The cost of eating out increased an improved 2.3% following a 2.9% 2015 rise.

Energy prices declined 1.2% last month (+6.9% y/y) as gasoline prices fell 2.7% (+10.7% y/y) following a 7.3% rise. Fuel oil prices improved 0.3% (12.6% y/y) after four months of stronger increase. Utility costs strengthened 1.2% (4.7% y/y), the strongest rise since May. Electricity prices inched 0.1% higher leaving the y/y gain of 2.6% elevated compared to 2016's 1.1% decline.

The consumer price data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.

Consumer Price Index, All Urban Consumers (% chg) Dec Nov Oct Dec Y/Y 2017 2016 2015
Total 0.1 0.4 0.1 2.1 2.1 1.3 0.1
Total less Food & Energy, 0.3 0.1 0.2 1.8 1.8 2.2 1.8
  Goods less Food & Energy 0.2 -0.1 0.1 -0.7 -0.7 -0.5 -0.3
  Services less Energy 0.3 0.2 0.3 2.6 2.7 3.1 2.6
 Food 0.2 0.0 0.0 1.6 0.9 0.3 1.9
 Energy -1.2 3.9 -1.0 6.9 7.9 -6.6 -16.7
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