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Economy in Brief

U.S. CPI Increase Moderates; Core Price Gain Steadies
by Tom Moeller  July 12, 2018

Inflationary pressures moderated last month. Consumer prices inched up 0.1% (2.9% y/y) during June following two months of 0.2% increase. Expectations had been for a 0.2% rise in the Action Economics Forecast Survey. The CPI excluding food & energy rose 0.2% (2.3% y/y) for the fourth month in the last five. The gain matched expectations.

Services prices continued to outpace goods prices. The 0.2% increase followed a 0.3% gain and pulled the y/y rise up to 3.1%, its quickest since early last year. Medical care services strengthened 0.5% (2.5% y/y) as hospital fees surged 0.8% (4.7% y/y). The cost of recreation services improved a steady 0.4% (2.3% y/y). The owners' equivalent rent of primary residences rose 0.3% (3.4% y/y) and rents of primary residences also increased 0.3% (3.6% y/y). Education & communication services prices rose 0.3% (1.1% y/y). Transportation services prices increased 0.2% (3.7% y/y), but public transportation costs fell 0.8% (-2.7% y/y). Miscellaneous personal services declined 0.1% (+3.7% y/y) as financial services costs fell 0.4% (+6.1% y/y).

Goods prices less food & energy were little changed, but the 0.2% y/y decline compares to -1.0% as of the end of October. Education & communication product prices were off 0.9% (-2.4% y/y) and reversed May's 0.7% gain. Apparel prices fell 0.9% (+0.6% y/y) after holding steady the month prior. Appliance prices held steady m/m, but the 1.1% y/y rise compares to price deflation in the prior five years. The cost of home furnishings eased 0.2% (-1.2% y/y) after a 0.6% drop. New vehicle prices rose 0.4% (-0.5% y/y) but used car & truck prices jumped 0.7% (-0.7% y/y). The 0.2% decline (-3.2% y/y) in recreation product prices was led by a 0.6% fall (-13.6% y/y) in the cost of video & audio products. To the upside, medical care goods prices rose 0.2% (+2.4% y/y) after a 1.3% surge.

Food prices increased 0.2% (1.4% y/y) as dairy & related product prices strengthened 0.7% (0.4% y/y). Fruit & vegetable prices improved 0.5% (0.2% y/y) following a 0.3% decline. The cost of cereal & bakery products gained 0.6% (0.5% y/y) after no change in May. Meat prices eased 0.4% (+0.1% y/y) but seafood prices surged 0.5% (1.4% y/y). Egg prices fell 7.1% (+14.1% y/y).

Energy prices were off 0.3% following two months of strong increase. A 1.4% decline (-0.1% y/y) in the cost of electricity and a 1.7% drop (-2.1% y/y) in natural gas prices held back the increase in the overall figure. Gasoline prices increased 0.5% (24.3% y/y) after two months of strong gains. Fuel oil prices surged 2.9% (30.8% y/y).

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) Jun May Apr Jun Y/Y 2017 2016 2015
Total 0.1 0.2 0.2 2.9 2.1 1.3 0.1
Total less Food & Energy 0.2 0.2 0.1 2.3 1.8 2.2 1.8
  Goods less Food & Energy -0.0 -0.1 -0.1 -0.2 -0.7 -0.5 -0.5
  Services less Energy 0.2 0.3 0.2 3.1 2.7 3.1 2.6
 Food 0.2 0.0 0.3 1.4 0.9 0.3 1.9
 Energy -0.3 0.9 1.4 12.0 7.9 -6.6 -16.7
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